"Will this be a continued change in 2024? Time will tell, but the data certainly points in that direction."
- Nathan Reilly - Twenty7tec
With 70.73% of mortgage searches during 2023 for terms of 25 years and over, Twenty7tec looks at the possibility of short-term mortgages being a thing of the past.
Since the 40-year-term mortgage became mainstream in 2021 following Habito’s launch of the first 40-year-fixed rate mortgage, the demand for long-term mortgages has skyrocketed and dragged the majority of searches away from shorter terms.
What would have traditionally been 25-year terms and under is now overtaken by those looking for 25 years plus.
In fact, in the years 2022 to 2023, 70.73% of the total mortgage market was searching for a mortgage 25 years and over, with only 29.27% looking for under 25 years.
When comparing 2021/2022 to 2022/2023, Twenty7tec found:
Purchase mortgage demand (for all but first-time buyers) for 40 years or more rose by 16.45%. All other search term demand dipped.
Remortgage searches saw the biggest rise across the board, with searches for 40 years or more increasing by 54.82%.
First-time buyers saw the most significant rise in 40 years or more searches - which were up 43.75%.
Nathan Reilly, Director of Twenty7tec, says: “What’s perhaps most interesting about these figures is that the biggest rise is for remortgage searches as this group will have already had a term for at least two years, and they are seeking long-term mortgages as an option to bring payments down.
“Will this be a continued change in 2024? Time will tell, but the data certainly points in that direction. House buyers are actively seeking ways to bring their monthly payments down as other payments soar, and extended terms may be one way to do that.
"However, longer-term mortgages can also increase the total debt size and take far longer for house buyers to pay it off, leaving some unable to be mortgage-free until they’re retired.”
