Should 40 year mortgages be banned?

@Bookworm1111 anyone would think that the risk of pensioners in future years still paying off long term mortgages and the current extortion racket operated by BTL landlords might be linked… 🤔

Meanwhile, the press is also talking about the urgent need to cap rents from being hiked up private landlords. Just think how much people could save if they didn't have extortionate rents to pay BTL owners eh.

https://www.theguardian.com/society/article/2024/may/13/cap-rent-rises-england-wales-labour-report-cowan-evictions

OP I don't mean this horribly but the more the post you are coming off in a really negative and ignorant way. I am on the property ladder however I feel insulted on behalf of younger people with the way you are talking about them and their 'state of the art phones'. You seem very out of touch with the rest of the world.

I posted the below article further up the thread however I don't think you read it. Can you really not see how different times are now?

'Mortgage rates of 6.43% today are equivalent to a rate of 25.7% in 1980 - housing is now at its least affordable since records began.

As details emerged yesterday that the average 2-year fixed rate mortgage is now 6.43%, Leeds Building Society has looked at historical data to calculate the equivalent mortgage rates.

Interest rates of 6.43% may seem lower than the mortgage rates of 15% which borrowers were paying in 1980 for example, but there is a critical difference: surging house prices, driven by a lack of supply and historically low interest rates since the financial crisis of 2008, and the commensurate increase in household indebtedness, mean that the 6.43% mortgage rates of today are equivalent to a rate of 25.7% in 1980 (see Editors’ notes for calculation).

In 1980, the average UK house price was around £21,000 and mortgage costs accounted for 11.3% of disposable income (see Editors’ notes). Today, with the average 2 year fixed rate mortgage on offer to new customers currently standing at 6.43%, those figures are around £292,000 and 45.1% respectively.

Housing is now at its least affordable point since records began. The average home currently costs 9.1 times the average local wage compared to 3.5 in 1997 (Source ONS). This particularly impacts young people. Rates of home ownership amongst 25-34 year olds have collapsed over the last 30 years. In 1996, home ownership levels for this age bracket were 65%. By 2016, the level for this age group had fallen to 27% - giving them the label of ‘generation rent’.'

www.leedsbuildingsociety.co.uk/_resources/pdfs/press-pdfs/press-releases/housing-is-now-at-its-least-affordable.pdf

Are 35 year mortgages ok?

Am beginning to think the OP is Kirsty Allsopp…

Lol, just spotted that too.

Half baked ideas it is then...

30-year fixed rate mortgages are the norm in the US.

They seem to work perfectly well for most people, who will end up gaining equity faster than they pay down the mortgage. Most people will sell well before the 30-year term, too.

I think the key to your situation is 'rental properties'.

What is stopping a teacher/nurse/policeman from buying a house costing £200k?? How about the fact that they only generate salaries of £30-£35k on average, so they will only get a mortgage of 150,000? That the take home salary is £2300 and their mortgage is £1000, before transport/fuel/car loan/car insurance, food, utilities, childcare costs, clothes/shoes…?

surely you cannot be so naive?

If the longer term lowers the monthly payments and therefore allows someone to buy this year instead of in say 5 years time when prices have also increased I don't see the issue. If the alternative is long term renting then again what's the issue? I remember being horrified when taking out my first 25 year mortgage seeing that we would pay back something like 2.5 x the amount borrowed but I'm still glad we did it. 25 year mortgages were the norm for many years when life expectancy was lower.

I’d rather pay a 40 year mortgage than possibly 70 years of rent.

So your bright idea is that all the millions working for the NHS. armed forces, police, fire officers, teachers, council workers, major supermarkets, car makers, building firms, train transport staff move to the north of England? Who's going to do those jobs in the rest of the country!?

You're being deliberately obtuse. You know that's not the answer. You're also being goady by saying that people who can't get onto the housing ladder are busy spending their money on new cars, multiple holidays etc. No they're not – they struggling to make ends meet to pay rent to greedy private landlords.

Talking of which, why is it not okay for the Govt to sell off council properties, but it's okay for you and your family to reduce the nation's housing stock by snapping up houses/flats for BTLs to rent out?

If I were 25, I'd rather have an affordable mortgage I'd be paying until I was 65 than be using my money to pay my landlords mortgage, watching house prices move ever further out of my reach until I risked still having to be paying a landlords mortgage for the rest of my days.

We thought this also when we bought our flat on a 40 year mortgage while on a low income and with a poor credit score. After making a few small overpayments we reduced the term to 30 years when the first 2 year fixed term ended, then 25 and we able to fix for longer terms. We wouldn't have been able to buy for several years or at all without it.

So property hoarding runs in the family then. But that's definitely nothing to do with the current housing crisis of course, that's just down to 40 year mortgages and, when you were challenged on that, down to right to buy.

enough for me to make an informed judgement and these days unlike when we took our first mortgage, there was no internet, therefore most people lacked knowledge and skills re mortgages.

No internet didn't mean 'no chance to do any research'.
You really do have a selective memory.

More BTLs?! And you still don't think landlords hoovering up properties is part of the problem?

Just to add I have encouraged my kids NOT to get a BTL. Because it's an unethical distortion of the housing market. A house is for living in, if you want to earn money, you get a job.

Sorry you lost your mum young.

What I'm taking away from the rest of your post is that you worked hard and cut your cloth accordingly – but many young people are doing exactly what you did now, going without holidays, keeping an old car going etc, not eating out, and it's STILL not enough to pull together a decent deposit to allow for a shorter mortgage term. As PP have said, you seem wildly ignorant about the financial reality facing young people trying to get on the property ladder now. How it was back in your day is not how it is now.

@DSC, you appear unable to understand that there are people right now who are doing all the exact same things that you did back in the day and still cannot buy a house except with a long mortgage because both house prices and the cost of living are so high.

Your utter lack of understanding that just because you did it 30 years ago, it is possible for everyone to do it now (in a completely different economic reality) is astounding.

You've had an actual expert clarify this to you and you've completely ignored them. Pardon me for listening to someone who actually understands what they are talking about over someone who thinks opinions are facts.

This...

Maybe sell your "couple" rental houses for what you bought them for, and at least 2 families won't need a 40 yr mortgage...