50-year mortgages for a foot on the ladder
The government is contemplating ultra-long mortgages as a way to boost homeownership, with 50-year terms currently under consideration.
Borrow more
Longer mortgage periods would allow potential homeowners to borrow larger sums, which means they would be able to afford higher-priced homes. With the average house price having climbed by 15.5% in the year to July1, greater affordability would provide a huge boost to millions of people struggling to get a foot on the housing ladder.
Repay more
There is a price to pay, however. Calculations show just how expensive these deals could end up. One estimate2 for buying an average house on an average long-term fixed rate deal (6.19%) puts monthly repayments at £1,140. Over a 50-year term, this would mean £472,984 paid in interest alone!
Longer terms
There is already a clear trend in favour of longer mortgage terms. Indeed, the average loan term taken out by a first-time buyer hit 30 years in June3, a record high. This is nearly five years longer than the average loan term two decades ago.
1ONS, 2022
2Barrows and Forrester, 2022
3UK Finance, 2022