Majority of brokers report “inevitable” increase in demand for 35-year mortgages

19 October 2017

  • Nearly seven in ten (69%) mortgage brokers report an increase in demand for 35-year mortgages in IMLA’s latest Intermediary Lending Outlook research
  • Over one in ten (13%) report a ‘substantial’* increase in the first six months of 2017
  • More than three-quarters of brokers (77%) and 74% of lenders say increase in demand for 35-year term mortgages is an “inevitable consequence” of low wage growth and rising house prices
  • Industry clear that 35-year terms are an important option for consumers – but one in six (16%) of brokers and lenders worry it will limit people’s capacity to save for retirement.

*’Substantial’ defined as over 10%

Based on responses to research conducted by Instinctif Partners in August 2017, with 25 responses from IMLA members and 140 from brokers.

Peter Williams, Executive Director of IMLA, comments

“In recent years, rising house prices, inflation and low wage growth have put significant pressure on prospective buyers’ incomes, meaning that many would-be borrowers now have to spread their payments out for longer periods in order to get a loan (and to qualify for a mortgage under the affordability tests now in place). Recently the PRA raised concerns about longer term mortgages and their negative impacts. In reality, around a third of first-time buyers take out a mortgage with a term of over 30 years and most of these are for less than 35 years.

“The majority of brokers (62%) and lenders (68%) agree that longer term mortgages are an essential option for aspiring homeowners and would argue that this is a response to reality and remains responsible lending. However, this in no way lets the government off the hook in needing to act swiftly to address the housing crisis. With many borrowers struggling to make homeownership a reality, it is recognised that the growing recourse to longer-term mortgages could impact upon people’s capacity to save for retirement albeit this is offset to a degree by the purchase of a property asset.

“In order to prevent retirement saving and homeownership becoming mutually exclusive, government and policymakers have a responsibility to tackle the root of the chronic supply/demand crisis facing the UK. Theresa May’s housing summit at No 10 is recognition of that and working in tandem with the industry, we would hope the government can move forward to improve housing supply and the life prospects of Generation Rent.

For further information please contact:
Fran Hart / Amy Boeskstein, Instinctif Partners
Tel: 0207 427 1400

Notes to Editors

About IMLA

The Intermediary Mortgage Lenders Association (IMLA) is the trade association that represents mortgage lenders who lend to UK consumers and businesses via the broker channel. Its membership unites 43 banks, building societies and specialist lenders, including 16 of the top 20 UK mortgage lenders responsible for more than £180 billion of annual lending.

IMLA provides a unique, democratic forum where intermediary lenders can work together with industry, regulators and government on initiatives to support a stable and inclusive mortgage market. Originally founded in 1988, IMLA has close working relationships with key stakeholders including the Association of Mortgage Intermediaries (AMI), UK Finance and the Financial Conduct Authority (FCA).

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