Rising house prices are pushing more first-time buyers into longer-term mortgages to afford their monthly repayments. About 70% of first-time buyers last year took out a mortgage with an initial term of more than 25 years, according to Nationwide's house price index affordability report. Ten years ago 45% of first-time buyers took out long-term mortgages, typically for 35 years. Andrew Harvey, senior economist at Nationwide, said that higher house prices were a driving factor and that some first-time buyers took out longer-term mortgages to be able to afford "a slightly bigger, better property". A rise in the retirement age has also made people more willing to take on longer-term mortgages. Nationwide also revealed that finding a deposit is still the biggest challenge for first-time buyers as house prices remain high. Outside of London, monthly mortgage payments relative to take-home pay remain affordable. However, trying to find a 20% deposit for a property is still proving to be a major obstacle with the average 20% deposit being 104% of the average income.
The Times (18/01/2021) Daily Express (18/01/2021)