35-year mortgages ‘are storing up problems’

THE rising popularity of 35-year mortgages could be storing up problems for the future, the Bank of England’s deputy governor warned yesterday.

As house prices have surged, a growing number of borrowers are being forced to spread home loans over a longer period than the traditional 25 years.

Almost 16 per cent of all mortgages now last 35 years or more, against less than 3 per cent in 2005. The Bank is worried that many people taking out these loans will still be paying them off after retirement.

Speaking at the Building Society Association’s annual conference, deputy governor Sam Woods said firms should comply with the ‘spirit as well as the letter of the law’ and make sure homeowners would be able to pay loans even after retire- ment, or else they risked ‘storing up problems for the future’.

Households have been urged to snap up ultra-cheap mortgages while they can amid predictions of interest rate rises later this year. Finance expert Charlotte Nelson said: ‘Borrowers ... coming to the end of their deal may be wise to consider a low fixed-rate now, before it’s too late.’ The interest rate on the average two-year fixed deal is currently 2.26 per cent.