The Rise Of The Thirty Year Mortgage

Nearly a quarter of all new mortgages are for 30 years

, according to new figures recently released.

The Office for National Statistics has shown that 23.3 per cent of mortgages now cover a three decade period - or more.

In the early 1990s the traditional 25 year deal made up 70 per cent of all mortgages issued. That figure has now dropped to 30 per cent.

Immediately after the financial crisis of 2007/8 the number of 30 year mortgages decreased for the first time since they were introduced.

In 2010 they accounted for under 20 per cent of all mortgages that year.

But this level has now gone back up and stands at over 23 per cent of all mortgages.

However, comparing figures is not as simple as it might seem because of all the changes within the mortgage industry and within society itself.

But Bob Pannell, from the Council of Mortgage Lenders, does believe that the figures reflect the growing cost of buying a home.

He added that not too much should be read into the figures because the change to regular remortgaging every couple of years, allied with the rise of interest-only deals, complicated the picture before 2007.

Mr Pannell said the trend shows that as house prices have risen and regulations become more stringent on the sale of mortgages, first-time buyers and existing home owners have decided to take longer to pay off their mortgages.

And with the cost of living getting more expensive, taxes increasing and jobs less secure, home-owners are dragging their mortgages out for longer.

And of course a persons working life is getting longer, so it makes sense for mortgages to lengthen too.

Max Erskine from mortgagerate247.com said: The rise of the 30 year mortgage should surprise no one.

The average age first-time buyers are now finally getting onto the property ladder is getting higher and higher.

This shows that people are finding it harder and harder to afford. And one benefit of a longer term deal is that the monthly payments are less.

You also have to take into account that peoples working lives are getting longer, so a 30 year period does not sound as bad as it once might have done.

Often a 30 year deal is the only option available for house buyers because anything less and it would become unaffordable.

I have also seen a rise in even longer mortgages and I have every reason to expect that this trend will continue, too.

by: Mikel Frederick

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