Sharp Rise in First-Time Buyers Taking Mortgages Lasting at Least 30 Years

Sharp rise in first-time buyers taking mortgages lasting at least 30 years

07 Mar Sharp Rise in First-Time Buyers Taking Mortgages Lasting at Least 30 Years

Figures from a report recently carried out by Halifax suggest that death of 25-year mortgage could be on the horizon, with 28% of first-time buyers choosing 30- or 35-year mortgage terms in 2016, 11% higher than figures from 2006.


According to recent figures from a report carried out by the Halifax, the traditional 25-year mortgage could be dying a death. There appears to be a growing number of first-time buyers opting for 30 or 35 year deals, which suggests that many will still be burdened with mortgage debt repayments until their 60s and 70s.

In 2016 around 28% of all first-time buyers with a mortgage opted for a 30- to 35-year term – up sharply from 11% in 2006 according to the Halifax.

In the meantime, the average price first-time buyers are paying for a property passed the £200,000 mark for the UK last year, rising to above £400,000 in London.

With the continued rise of house prices, amounting student debt and the rising age in couples having children, a lot of couples are buying property later in life than previous years, however still opting for a longer repayment term.  According to the Halifax the age of the average first-time property buyer is now 30.  As attractive as it may seem to first-time buyers to stretch the repayments over a longer term, reducing their monthly payment, potential borrowers should consider that the longer they take to repay the loan, the more interest they will pay. This essentially means that they are paying more over the life of the mortgage and the mortgage will likely last into their retirement. Traditionally most lenders would only grant mortgages up until the applicant’s retirement age but it is becoming more popular mortgages being offered over repayment terms of up to 40 years.

In 2006, almost two-thirds (64%) of first-time buyers opted for a term of between five and 25 years, while the remaining 36% were over 25 years. Ten years on, the picture has dramatically changed: 60% of first-time buyer mortgages involve a term of at least 25 years.

In 2016, the average price paid by someone who had never owned a property before was £205,170 – the highest on record. At the height of the housing downturn in 2009, the figure stood at £135,254. In London, first-time buyers have seen the average price rise by 81% since 2009 to reach £402,692 – again, the highest on record.


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