More first-time buyers in South Yorkshire 'stretching out' their mortgage terms for longer
It's to help make monthly repayments more affordable
More than half (57%) of first-time buyers clubbed together with someone else to buy a home last year, with 43% purchasing their property on their own, according to data from TSB.
In 2022, 54% of first-time buyers with TSB took out a joint mortgage, with 46% going it alone.
The bank reported there has also been an increase in the average mortgage term for first-time buyers, from 30 years in 2021 to 32 years in 2023.
Stretching out a mortgage term for longer is one way to make elevated mortgage rates more affordable on a monthly basis, although buyers could end up paying more in interest over the longer term.
Overall, first-time buyers accounted for just over a third (35%) of mortgage completions in 2023, TSB said, with the average age of someone getting on the property ladder falling to 31, from 32 in 2022.
Video banking accounted for nearly two-thirds (63%) of appointments in which customers purchased a mortgage directly from TSB in 2023.
Roland McCormack, TSB mortgage distribution director, said: "Across the UK, the drive to get onto the property ladder is bigger than ever with first-time buyers taking out extended repayment terms to acquire a home."
Last week, the chief executive of UK Finance, David Postings, told an industry gathering that a typical first-time buyer in 2023 would have needed to stretch their loan out for half a century to achieve the same level of affordability that they would have had across a 30-year mortgage term in 2022.
Mr Postings said previously: "We looked at a typical first-time buyer in 2022, which was a relatively stable year, and the average mortgage term was 30 years.
"But we then rolled forward the average change in house prices, mortgage rates and incomes to the middle of 2023. For that buyer to achieve the same affordability, as measured by their mortgage payments compared to income, they would have needed to borrow over a 50-year term.
"As rates rose through 2023 this calculation increased further.
"A 50-year term sits outside any lender's underwriting criteria and we're not suggesting we want mortgages of this length. This does, however, demonstrate why we have seen such a significant increase in longer term borrowing."
Troy Mallard is a mortgage advisor in Rotherham:
"From a financial point of view, the shorter that mortgage term, the less interest someone will have to pay back.
"So, by increasing the mortgage term to 35-40 years, you'll end up paying more interest.
"A lot of lenders typically allow a mortgage term for 35 years, but a lot of them have now changed that to being a maximum of 40 years.
"We are seeing more and more first-time buyers having to stretch it out so they can afford their monthly payments, as well as the cost of living."