A fifth of first-time buyers are taking out mortgages for 35 years or more to get on the housing ladder as budgets are squeezed

A record 20 percent of first-time buyers are taking out mortgages with terms of more than 35 years as they stretch their financial resources to enter the housing market.

The figures from industry body UK Finance illustrate the lengths many are going to to afford a home – amid higher interest rates and pressure on the cost of living.

Such deals were once a rarity. By spreading the repayments over a longer period, they become more affordable in the short term.

But it means they will earn more interest overall and cost more.

And for buyers in their mid-30s or older, that means they're still paying off their mortgages into their 70s.

According to UK Finance, the average age of a starter in the market is 32.8 years.

James Tatch, head of analysis at UK Finance, said: 'Rising interest rates and pressure on the cost of living, combined with high house prices, have led to buyers looking for ways to increase their affordability.

'Against this background, the share of starters who have taken out a mortgage with a longer term has increased until 2023, although this trend appears to be weakening.'

The figures show how the Bank of England's higher interest rates – which have risen from 0.1 per cent in December 2021 to 5.25 per cent today – are impacting the financial future of new generations of buyers.

At 20 percent in September, the share of starters who took out a mortgage was the highest in almost twenty years.

The share of first-time buyers entering into such long-term deals was just 9 percent in December 2021, when the Bank of England started raising interest rates.

And when similar records started in 2005, it was only 2 percent.

Figures from UK Finance showed that mortgages with terms of more than 30 years were also becoming increasingly popular among homebuyers, accounting for 56 percent of deals – also a record.

And among movers, one in three (33 percent) takes out a mortgage with a term of more than thirty years.

UK Finance said a longer-term deal could be “a choice rather than a necessity” as some borrowers choose to keep monthly costs low even if they can borrow in the shorter term.

And it said they would have the option to shorten the term at a later date.

Former Pensions Minister Ros Altmann said: 'Given the dramatic rise in mortgage rates and the high levels of house prices we have seen, it is not surprising that new buyers are having to take out a longer term mortgage to have any hope of can afford that. borrow enough to buy a first home.

Buyers in their mid-30s or older are still paying off their mortgages in their 70s (Stock Image)

'The monthly costs of a longer loan will be lower, but in the long term they will obviously have to pay a lot more to their lender because the total repayments will be higher the longer the mortgage term.

'This means that more people will probably pay off their mortgage later in life, possibly until retirement. This requires careful financial planning as people assess their working lives.”

Figures published this week by the Office for National Statistics (ONS) comparing cost-of-living pressures for different types of households in September showed that mortgage holders suffered the highest cost inflation at 9.3 per cent, thanks to higher interest rates.

This compares with an average of 8.2 percent and 7.2 percent for private residents.

Separate ONS figures published this summer showed that the average house price in England was 8.4 times the average income in the year ending March 2022.

That was a slight improvement compared to the previous year, when the affordability ratio was 8.7.

But it still means that homes are only half as affordable as they were in 1999, when the average home could be purchased for 4.4 times the average income.