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| Version 3 | Version 4 |
|---|---|
| Young face growing mortgage debt burden | Young face growing mortgage debt burden |
| (about 1 hour later) | |
| Young first-time buyers are increasing their overall mortgage debt in order to tackle short-term financial pressures. | Young first-time buyers are increasing their overall mortgage debt in order to tackle short-term financial pressures. |
| The average mortgage term is lengthening from the traditional 25 years, according to figures from broker L&C Mortgages. | The average mortgage term is lengthening from the traditional 25 years, according to figures from broker L&C Mortgages. |
| Its figures show the proportion of new buyers taking out 31 to 35-year mortgages has doubled in 10 years. | Its figures show the proportion of new buyers taking out 31 to 35-year mortgages has doubled in 10 years. |
| That means lower monthly repayments, but a bigger overall bill owing to the extra interest incurred. | That means lower monthly repayments, but a bigger overall bill owing to the extra interest incurred. |
| The extra total cost can be tens of thousands of pounds. | The extra total cost can be tens of thousands of pounds. |
| Where can I afford to live? | Where can I afford to live? |
| Term time | Term time |
| The average term for a mortgage taken by a first-time buyer has risen slowly but steadily to more than 27 years, according to the L&C figures drawn from its customer data. | The average term for a mortgage taken by a first-time buyer has risen slowly but steadily to more than 27 years, according to the L&C figures drawn from its customer data. |
| More detailed data shows that in 2007, there were 59% of first-time buyers who had mortgage terms of 21 to 25 years. That proportion dropped to 39% this year. | More detailed data shows that in 2007, there were 59% of first-time buyers who had mortgage terms of 21 to 25 years. That proportion dropped to 39% this year. |
| In contrast, mortgage terms of 31 to 35 years have been chosen by 22% of first-time buyers this year, compared with 11% in 2007. | In contrast, mortgage terms of 31 to 35 years have been chosen by 22% of first-time buyers this year, compared with 11% in 2007. |
| The total cost of a £150,000 mortgage with an interest rate of 2.5% would be more than £23,000 higher by choosing a 35-year mortgage term rather than a 25-year term. | The total cost of a £150,000 mortgage with an interest rate of 2.5% would be more than £23,000 higher by choosing a 35-year mortgage term rather than a 25-year term. |
| The gain for the borrower would be monthly repayments of £536, rather than £673. | The gain for the borrower would be monthly repayments of £536, rather than £673. |
| David Hollingworth, of L&C Mortgages, said that interest-only mortgages were far less of an option for first-time buyers than a decade ago, and many needed to find a large deposit. | David Hollingworth, of L&C Mortgages, said that interest-only mortgages were far less of an option for first-time buyers than a decade ago, and many needed to find a large deposit. |
| The income squeeze also meant that many "needed some slack in the monthly budget", so were choosing the longer-term mortgages. | The income squeeze also meant that many "needed some slack in the monthly budget", so were choosing the longer-term mortgages. |
| Lenders have been offering longer mortgage terms, of up to 40 years, to reflect longer working lives and life expectancy. | Lenders have been offering longer mortgage terms, of up to 40 years, to reflect longer working lives and life expectancy. |
| He suggested that borrowers regularly reviewed their deals. | He suggested that borrowers regularly reviewed their deals. |
| "Ideally, if you keep the term shorter, it will save you money in the long run," he said. | "Ideally, if you keep the term shorter, it will save you money in the long run," he said. |
| House prices | House prices |
| First-time buyers in some parts of the country have seen prices rising very slowly since the financial crisis, assisting affordability, despite stricter checks by lenders. | First-time buyers in some parts of the country have seen prices rising very slowly since the financial crisis, assisting affordability, despite stricter checks by lenders. |
| The latest survey from the Royal Institution of Chartered Surveyors (RICS) showed that more of its members expected house price falls than those expecting rises in the next three months. | The latest survey from the Royal Institution of Chartered Surveyors (RICS) showed that more of its members expected house price falls than those expecting rises in the next three months. |
| Price falls have been most marked in London and South East England in September, they said, with falls also recorded in East Anglia and North East England. | Price falls have been most marked in London and South East England in September, they said, with falls also recorded in East Anglia and North East England. |
| On a national level, demand from new buyers and sales also fell in September, the survey suggested. | On a national level, demand from new buyers and sales also fell in September, the survey suggested. |