Should 40 year mortgages be banned?

[DistinguishedSocialCommentator]

Reading and hearing more and more of this.

IMO, extending mortgages and making almost a norm re 40 years for many, and it was 25 years when we got our first and second mortgages - 40 years IMO is just fueling the price rises in property

AIBU seeking a ban on 40 year mortgages??

IMO, 30 yrs is more than enough and there must always be a minimum 10/15% deposit and a 2 year record of saving money. This IMO, will gradually settle property prices.

FYI, we paid off on our own property and a couple of rentals about 14 years ago possibly a bit more

NB: Of course, no government will agree to that as it will hold back national growth and ledners will definitely fight it as it hits their profits. But 40 years mortgage is more than a life sentence into

Our 25 year mortgages we paid off with 15 and 14 years respectively

40 yr metages benefits the lenders bigger profits and feuls property prices

https://www.standard.co.uk/business/hsbc-40-year-mortgage-deal-interest-rates-bank-of-england-marathon-prices-lender-bank-big-six-b1103513.html

My own personal view is that the following would help the situation

Far more social housing of all types - gvt bring in DiYso again (Labour did it for awhile) - shared ownership on the open market- not just new builds-

No buy to let mortgages over35% .

Ban Airbnb of whole properties (exemption for annexes on owners grounds etc) - still allow room letting s etc .

Limit holiday cottage/flats registration to a certain percentage in a given area.

Bring back self declaration mortgages for those not in PAYE at 80% - provided they have a 3 year plus of rental or mortgage payments of at least the level being applied for.

Stop right to buy totally -it's a really poor policy and I find it galling that I know people who have had their rent covered off for years and barely contributed who then have bought at huge discount either by inheritance or a family member buying it - and then being flogged off at huge profit a few years later.

I guess I was meaning generally- it was easier generally 20-30 years ago to buy and obtain a mortgage with a low deposit. It’s not easy now for people on comparable wages to 20/30 years ago. That is a fact. The amount of people renting at either time does not negate that fact.
Also you keep quoting your parents? Im not sure what moving from the north to south has to do with how easy or not house buying was that the time? In fact, if anything it bolsters my view that getting a large mortgage was easier then. If someone moved from the north to south now going from a 200k house to a 2mil house they would either have been given a huge increase in mortgage or saved a boat ton of money. If they saved the money then if even further sided with my argument - who on Earth now can afford to save that much alongside paying huge mortgage rates and with this bonkers cost of living right now?

Property prices are high because we have too few houses for too many people. 40 years mortgages are a reaction to constrained supply driving up prices, but are not the cause of it. All that will happen if you reduce mortgage terms without improving availability of housing is that even fewer people will be able to buy a home.

I wouldn't take one out personally, but I don't see it as my business to police what other people are allowed to do with their mortgages.

For some people it might be their only hope of getting on the ladder.

I was going to say something like this. Do governments really have to get involved in every aspect of people’s lives? The financial ombudsman is not Mummy - adults taking out mortgages need to use their own good judgement.

There was a thread a little while ago which said that people expect the state to do absolutely everything. I might dig it out.

No one that I know of said it was 'that easy' or any kind of easy but you have addressed your comment to me as if I did. You also make an assertion about 'very few' people having the required pension income. Lenders presumably have done their research and assessed whether there is a demand or a need for this in a population where most people have worked and may have acquired occupational pensions, state pensions, other earned or unearned income and other assets such as property equity.

Talk about pulling up the ladder behind you.

Surely OP's position is that it would bring prices down, so if they are a landlord it doesnt ebenefit them and it makes it easier for people to buy, not harder

I dont think 40 year mortgages should be banned but I understand why the OP thinks that this might work to stem prices (it wouldnt)

Fine so long as we don't bail out people who make poor choices.

But at the moment it seems like when someone makes a poor choice then it is always someone else's fault, we want compensation because we were miss sold the product.

If you are allowing people to make poor choices then you also need to accept that they have to own the potential consequences of those choices. Not give them a bail out by the taxpayer which is what largely happens at the moment.

For example repos on people not being able to pay mortgages are becoming increasingly rare. The cost of keeping people in their houses that would otherwise be repo'd is borne by the State (taxpayer). I am happy for the state to bail people out, but that goes hand in hand with restricting their ability to make stupid choices in the first place.

You clearly don't understand how the housing market has changed in the last 30 years. Although I was one of the lucky ones (bought in 1998, paid off in 2011), I can understand why things are so hard for people now. Our house back then was just under 2.5 times our combined income and we had a 23% deposit. The same house now at current value would be 12 times household income. Granted I'm single but even if I had a partner earning the same, it's 6 times household income.

You ask why people can't live with their parents for longer - they do, and still get nowhere. This is of course aside from the vexed question of what you do if the good job you need to save isn't available at commuting distance from said parents.

You refuse to acknowledge how much the world has changed in a short space of time.

Absolutely, hence why it’s more expensive to live in major cities than in more rural locations. Supply and demand.

lamdlords are selling up, fewer are getting into it, in some areas it’s led to a huge shortage and rental prices going through the roof. We need more landlords, not less. Because there will always be people who need to rent.

For me a 40 year mortgage is a great idea, if it allows people to be able to buy and habe manageable costs. It doesn’t mean they will pay for 40 years, although they might, it just makes it more affordable. I cannot see why the op is taking issue with it at all. I don’t see it driving house prices up. More just taking people out of rented.

@Abitofalark apologies- I think I maybe didn't word it as well as I could- what I meant to say is it still requires fairly substantial incomes and assets for all but the very modest mortgages- it isn't 'usually' one where you can just have a £300k mortgage as an example just based on your income ( a broker told me they presume you aren't going to be working post 70) or with average pensions-

Read your post - may have missed something but on the whole, I fully agree with everything

IMO, charge CGT on properties that had massive discounts from council sales as it was taxpayers money - CGT when sold just like private LL that paid FULL price pain CGT on gains - very fair IMO

I'll try for one last time as I've posted this before at other MN's - IMO, the 40-year mortgages facilitate property price rises, fact.

If buyers could not "afford" then sooner or later prices would fall. A property is only worth XXX if someone is willing to pay XXX, fact

private LL are facing massive challenges and some are selling up and others will be doing so and in turn, pushes up rents

The sale of 2 million council homes are to blame re lack of affordable rentals

Indeed

Property prices are high because we have too few houses for too many people

Cheap money over the last 15-20 years hasn’t helped.

Sadly, the gov does have to get involved as many easily led people around IMO

EG, we were being pushed an endowment mortgage years ago and the so-called financial lender was pushing and pushing with chosen words like "guaranteed minimum returns" these were at the lower projections. We stood by our guns and did not want that type of mortgage as too many risks based on stock markets and we were right on the whole

look at the article I posted from the Guardian newspaper

If you are taking a loan to buy a property - make sure you don't have other debts and pay it off as soon as you can but alls keep 20/30k in the bak at today's rates for a rainy day back-up

It's not just BTL but a lot more people with second homes ie holiday homes.
Perhaps a new tax, on-going tax on holiday homes?

@DistinguishedSocialCommentator it may be your opinion that 40-year mortgages push up prices but that doesn't make it a fact.

""their only hope...on the ladder"

IMO, that is the risk, ie people stretching themselves to the limit and then bang, mortgage rate hikes like the ones we've had in the past, I believe ours went to 17% for a short while in those days I don't think people did fixed terms as far as I can recall

Liz Truss has got into trouble millions on fixed and non fixed rates as they'd been low and some for a short time were getting money back I thin but most rates were on historical lows - I know as our cash saving were earing less than 1% at times

Lenders will lend as long as they feel their risk is covered they don't really care about the lenders ability or wellb being to that extent, IMO

40 years is too long - and many don't know these days ie not fully digested the small print about "early repyaments" are often limited and these days people often went of fixed rates for 3/5 years until that is Liz Truss trashing of our nation.*

What do you mean people don't digest the small print these days? This makes zero sense, you sound like someone with a little knowledge and to many silly ideas.

We had a 10% deposit and didn't push ourselves to the max budget the mortgage broker gave us, but still needed to go to 35 years to make our lives worth living. We are on 55k as a household. It should be more than do able to own our own home

Have you purchased recently? House prices are ridiculous and it's the only way of bringing payments to an affordable level. We got a 35 year mortgage 2 years ago, only way we could afford the mortgage and nursery fees whilst I'm part time 🤷🏻‍♀️

I'll try for one last time as I've posted this before at other MN's - IMO, the 40-year mortgages facilitate property price rises, fact.

Your opinion is not fact. It's just an opinion.

I cannot tell you how misleading these recent headlines are. Nobody is taking out a 40 year mortgage with a plan to stay in the same house and pay it off for 40 years. Some lenders go to age 80 now with proof of pension contributions because they know tha vast majority will be paid off before then.

Our term was 35 years in 2008. 16 years later we have moved and have 8 years left on this place - not 19.