Figures show rise in long-term mortgages
One in three first-time buyers in south Wales are taking out a mortgage that will last 35 years or more.
Ten years on from the failure of Northern Rock, as a result of financial problems caused by the subprime mortgage crisis, mortgages at 95% or above are now rare, but bigger mortgages on longer terms are growing as property prices have risen again.
In 2016, 31.7% of mortgages taken out by first-time buyers in the CF postcode were for a term of 35 years or longer.
This was up from 15.8% in 2006, according to figures released following a Freedom of Information request to the Financial Conduct Authority, which regulates the financial sector.
In comparison, 14.9% of all loans taken out in 2016 were for 35 years or more, although this has nearly quadrupled from 4% in 2006.
Among first-time buyers in the area, 7.4% took out a mortgage that was 4.5 times their income or bigger in 2016.
This compares to 8% in 2007, just as the financial crash hit.
Overall, lenders are limited to lending mortgages of this size to no more than 15% of customers in each quarter.
Overall in the postcode area in 2016, 4.7% of mortgages were this size.
Mortgages at 95% loan-tovalue or higher have all but disappeared since the financial crash.
In 2007, a quarter (25.3%) of first-time buyers took out a loan on this ratio or higher, with mortgages at 100% or more available, while in 2016 it was just 0.8%. For all loans, just 0.3% were at 95% or above in 2016.
However, mortgages through the Government’s Help to Buy schemes were available with as little as 5% deposit from the buyer, with the Government either lending or guaranteeing a bigger proportion of the loan.
Overall, one in 17 first-time buyer loans in 2016 (5.9%) are at high-income multiples (4.5 times or more), a high loan to value (90% or higher) and over a longer term (30 years or more). This compares to 4.9% in 2007, although loans of this type peaked at 6.8% of the market in 2014.
Across the UK in 2016, 28.1% of mortgages taken out by firsttime buyers were for a term of 35 years or longer.
The proportion in the first quarter of 2017 had risen even more to 30%. This was up from 13.8% in 2006.
First-time buyers in the Ipswich, IP, postcode are the most likely to take out longlength mortgages, with 45.4% of new loans taken out in the first quarter of 2017 taken out for 35 years or longer.
Across the UK, 13.5% of all loans taken out in 2016 were for 35 years or more, although this has nearly quadrupled from 3.8% in 2006.
In parts of outer London and the Home Counties, nearly a third of mortgages taken out by first-time buyers are at 4.5 times income or higher, including 32% in Watford, 31.8% in Uxbridge and 30.2% in Sutton.
Areas on the outskirts of London also have high proportions of mortgages taken out at high-income multiples (4.5 times or more), a high loan to value (90% or higher) and over a longer term (30 years or more), with 23.3% of first-time buyer loans taken out on these terms in Sutton, 22.2% in Enfield and 21.8% in Watford.
As a total of all mortgages in the area, these types of mortgages have more than doubled since the financial crash, going from making up 1.9% of all loans in 2007 to 4.6% in 2016.