A significant number of customers at Taylor Wimpey, one of the largest housebuilders in the UK, are choosing to extend their mortgage terms in order to make their monthly repayments more affordable. According to Taylor Wimpey, 27% of first-time buyers are now opting for mortgages that exceed 36 years, a notable increase from the 7% recorded in 2021.
While this strategy provides relief in terms of lower monthly payments, it ultimately results in higher overall costs for customers. The recent surge in mortgage rates, driven by the Bank of England’s efforts to curb inflation, has contributed to this trend.
It is worth noting that second-time buyers are also following suit by extending their mortgage terms. Currently, 42% of these buyers are securing mortgages of over 30 years, compared to 28% in 2021, as reported by Taylor Wimpey.
The latest data from UK Finance, the bank industry body, supports the observation of an increasing prevalence of longer-term mortgages. In March of this year, 19% of first-time buyer mortgages exceeded 35 years, marking a considerable rise from the 9% recorded in March 2022. Similarly, for individuals moving house, 8% of mortgages were for durations longer than 35 years, up from 4% the previous year.
As mortgage rates continue to climb, the property market has experienced a decline in the volume of house sales. While June saw a slight improvement in housing transactions compared to May across the UK, there was a 9% decrease compared to June 2022, according to statistics from HMRC (Her Majesty’s Revenue and Customs).
