Rental demand set to last long term as mortgage terms...

Breaking News

28 June 2023

2984 Reads
6 Comments

TODAY'S OTHER NEWS

Rental demand set to last long term as mortgage terms grow

It looks likely that rental demand will remain high over then indefinite long term as some people resist growing mortgage periods.

New analysis and a poll of 2,000 people by consultancy Hargreaves Lansdown show that more than one in six people expect to be over the age of 65 by the time they repay their mortgage.

And one in 10 expect to be over 70 – or never to pay it off.

Among those who were aged 55 and over and still had a mortgage, one in five expected to repay over the age of 70 and seven per cent said they’d never be able to repay their mortgage.

Of those who were already retired, 80 per cent owned outright and six per cent still had a mortgage.

Fast rising mortgage rates are likely to force more people to extend the period of their mortgage later in life - or to remain in rental property for longer, or possibly for life if deposits remain challenging to save.

Sarah Coles, head of personal finance at Hargreaves Lansdown, says: “Higher mortgage rates are likely to mean even more people paying their mortgage later in life. It has pushed the average two year fixed rate deal to around 6.2 per cent according to Moneyfacts, causing a remortgaging nightmare for hundreds of thousands of people.

“As a result, lenders have agreed with the government to make it easier to temporarily extend the term of the mortgage, without affordability checks. It is designed to make short-term mortgage tweaks easier, but there's every chance that people taking advantage may end up with a more permanent change, to make monthly payments affordable.

“With the average cost of a home now at £286,000, building a deposit takes far longer … It means the average age of a first-time buyer has hit 30.

“The fact that first-time buyers are borrowing so many multiples of their income means repayments are stretched over a longer period too.”

We're excited to announce that we're working on building a shiny new website for readers of Landlord Today! As part of this process, commenting on articles will be temporarily disabled. We look forward to sharing our new and improved Landlord Today website with you shortly!