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UK Mortgage terms getting longer.....

22 Feb 2016

Data just released by the Council of Mortgage Lenders (CML) show that nearly 60% of first-time buyers take out mortgages with a term greater than 25 years – around double that of ten years ago. Additionally borrowers that are moving and re-mortgaging are also trending towards longer terms

Further, and perhaps not surprisingly, borrowing at higher income multiples is also increasing – though this was reduced a little when the FPC (Financial Policy Committee) introduced limits for lenders on borrowing multiples in June 2014, following the Mortgage Market Review introduced in April 2014, but has crept up since.

The most likely reason for the lengthening terms is rising house prices, which mean that new borrowers have to have increased terms to get their monthly payments down as low as possible.

Given that lenders have lending limits (no more than 15% of lenders’ outstanding loans can be more than 4.5 times income), this could mean there is a constraint on prices, at least in the short term.

For the full CML release, including some informative charts, see here

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