Huge jump in young buyers on ‘marathon’ mortgages

Young Londoners desperate to get on the housing market are signing up at an alarming pace to “marathon mortgages” that last at least 35 years, warn financial advisers.

High numbers of under 30s are buying houses or more usually flats with mortgage deals that extend beyond a typical retirement age of 67 in the latest sign that there is a huge gap between demand and supply in the capital’s property market.

While the longer-term deals cut monthly repayments, they also hugely increase the size of the total debt in ways some warn could later be seen as a mis-selling scandal encouraged by big banks.

Figures from Experian show that in 2020 11% of under 30’s in London who opened a mortgage did so with a term of 35 years plus.

In 2023 this figure has risen to 27%.

The data also reveals that 38% of Londoners currently have a home loan that will continue beyond those borrowers turning 67 – much higher than the UK overall, where the figure is 33%.

The South East of England is the region with the highest percentage of mortgage holders (40%) with a deal that runs past normal retirement age and become "pensioner mortgages".

James Jones, Head of Consumer Affairs at Experian, says: “Our data suggests that Londoners under 30 are looking to secure longer mortgage repayment terms to help keep down monthly repayments on their homes. Looking at our data, we can see that there has been a 144% increase in under 30s taking out a mortgage with a 35-year plus term, in just three years.”

Alan Davison, Personal Finance Distribution Director at Together said: “While many will view these ‘marathon mortgages’ as a viable way to try proceed with property ambitions – it's key that first-time buyers don’t all now rush the starting gun and commit to longer-term repayment which might not be the best option.”

Craig Fish of Lodestone Mortgages says: “London continues to struggle with soaring property prices, and now we face a higher and uncertain interest rate landscape, there are a growing number of homeowners that are considering mortgages with terms in excess of 30 years.

"These extended terms can be tempting, after all they offer lower monthly payments that make home ownership more affordable. However, its crucial to understand the pitfalls that come with these types of mortgages, especially in the current climate. Long terms mortgages seem to be an attractive option for many, primarily first-time buyers or those with tighter budgets.

"But with London property prices at record high levels, it’s imperative that one considers the overall cost of home ownership and how much you’re willing to pay in interest over the years. Don’t just focus on the monthly payment now.”