Which? reports growing popularity of 40-year marathon mortgages

Which? reported on 13 May 2024 that "marathon" mortgages lasting up to 40 years are becoming more popular among first-time buyers, as higher borrowing costs push buyers towards longer terms¹.

Between December 2021 and August 2023, the Bank of England base rate rose from 0.1% to 5.25%¹. Before the first rate rise, 9% of first-time buyers were taking out mortgages lasting 35 years or more; by the time the base rate peaked, that figure had more than doubled to 20%, according to UK Finance data cited by Which?¹. Which? also analysed Moneyfacts data and found that more than eight in ten fixed-rate mortgages on the market are available with terms of up to 40 years¹.

Which? set out how monthly repayments compare on a £250,000 home with a 10% deposit and a two-year fixed rate at 4.86%¹:

Mortgage term	Monthly repayment during the first two years
25 years	£1,297
30 years	£1,188
35 years	£1,116
40 years	£1,064

On the same example, Which? said someone taking a 40-year term would theoretically pay £156,000 more in interest than somebody with a 30-year term, assuming they stayed on the lender's standard variable rate for the whole term after the initial fix¹. Which? noted that in reality borrowers would be advised to switch deals regularly, so the total interest paid would depend on mortgage rates and the equity held in the home at each remortgage¹.

Which? also reported that 42% of new mortgages granted in the last quarter of 2023 are due to go beyond the borrower's projected state pension age, according to Bank of England data, up from 31% in 2021¹. The data was obtained through a freedom of information request by the pensions consultant Sir Steve Webb, who estimated that more than a million such mortgages have been granted in the last three years¹.

"We already know that millions of people are not saving enough for their retirement and if some of that limited retirement saving has to be used to clear a mortgage balance at retirement they will be at even greater risk of poverty in old age."

Sir Steve Webb, quoted by Which?¹

Which? said the maximum term available depends largely on the borrower's current age and planned retirement age, and listed the maximum age limits of several lenders: Barclays, NatWest and Royal Bank of Scotland at 70; Coventry Building Society, Nationwide, Santander and Virgin Money at 75; and Halifax, HSBC, Lloyds Bank and Yorkshire Building Society at 80¹. It said Halifax will allow repayment from employment income up to 75 but may take projected retirement income into account up to 80¹.

Why it matters for households

A longer mortgage term lowers the monthly repayment but increases the total interest paid over the life of the loan, as the Which? figures show¹. For first-time buyers, the shift towards 35 and 40-year terms has happened while the base rate moved from 0.1% to 5.25% between December 2021 and August 2023¹. The Bank of England data indicates that 42% of new mortgages granted in the last quarter of 2023 are due to run past the borrower's projected state pension age, so a larger share of households face mortgage payments alongside retirement¹. Which? also noted that on a longer-term mortgage, little of the capital is repaid in the early years, with most of each payment going towards interest, which leaves borrowers more exposed to negative equity if house prices fall¹.

What happens next

Which? said the article was originally published in February and was last updated in May 2024 to reflect new statistics on the numbers of people taking out mortgages lasting into retirement¹. No further dated steps were reported.

Sources1 cited