Housebuilder sees rise in 36-year mortgages

Customers at one of the UK's biggest housebuilders are taking out longer mortgages to make monthly repayments more affordable.

Taylor Wimpey said 27% of first time buyers are taking mortgages of more than 36 years compared to 7% in 2021.

While extending mortgage terms means lower monthly payments, customers can end up paying more overall.

Mortgage rates have been soaring as the Bank of England raises interest rates to try to get inflation under control.

The housebuilder said that alongside first time buyers, second time buyers are also increasing mortgage terms, with 42% taking mortgages of more than 30 years, compared with 28% in 2021.

The latest figures from bank industry body UK Finance also show an increase over time in long term mortgages.

In March this year, 19% of first-time buyer mortgages were for more than 35 years, up from 9% in March 2022.

For people moving house, 8% were longer than 35 years, compared with 4% the previous year.

As mortgage rates have risen, the number of house sales has been on a downward path.

In the UK as a whole, the number of housing transactions was higher in June compared with May, but it was 9% lower than in June 2022, according to HMRC statistics.

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Taylor Wimpey said that interest rate hikes had hit the cost of borrowing.

The "challenging backdrop" for customers has led to more of them extending their mortgage terms, it said.

It added that the "substantially higher mortgage rates" had "inevitably" hit its results - but it said it expected to sell between 10,000 and 10,500 homes by the end of the year, which was at the upper end of its expectations.

It made a profit of £238m in the first half of the year, which was 29% lower than last year.

Meanwhile, Connells owner Skipton Group said the estate agents, which has 10% of the UK market, had made a net loss of £5.8m in the first half of 2023.

It said the fallout from last year's mini-budget, which "stalled" the housing market, had hit Connells sales.

Skipton Group chief executive told the BBC Radio 4 Today programme that although overall sales had fallen, the proportion of sales to first-time buyers had gone up.

Mortgage rates have been soaring after 13 consecutive interest rate hikes, and on Thursday the Bank of England is expected to put up rates again.

On Wednesday, financial information service Moneyfacts said the average two-year fixed mortgage rate was 6.85%, while the five-year rate was 6.37%.

Earlier this week, Halifax joined other lenders in offering customers mortgages up to the age of 75, rising from a maximum working age of 70.

What happens if I miss a mortgage payment?

• If you miss two or more months' repayments you are officially in arrears

• Your lender must then treat you fairly by considering any requests about changing how you pay, such as lower repayments for a short time

• They might allow you to extend the term of the mortgage or let you pay just the interest for a certain period but it could impact your credit file

Read more here.