Affordability pressures are making mortgage repayment terms longer and increasing the amount of lending at higher income multiples, the Council of Mortgage Lenders has said.
Data from the CML showed increasing numbers of lenders are lending at high income multiples.
Meanwhile the median term for first-time buyers has lengthened from 25 to 30 years within just a few years, according to the data.
Bob Pannell, chief economist at the CML, said: “Mounting affordability pressures, as house prices outpace earnings growth across much of the UK, provide the most plausible explanation for the change of direction.
“Lengthening payment terms provide strong evidence that such pressures are intensifying.
“Although the use of longer terms varies greatly across different types of borrower, reflecting their respective age profiles, the underlying trend is clear.”
Among first-time buyers, the proportion of borrowers taking out loans with a maturity of more than 25 years has continued to increase and now accounts for nearly 60 per cent of the total, roughly double that of a decade ago.
In 2014 the Financial Policy Committee said lenders should make sure borrowers could afford their mortgage payments if the base rate increased 3 per cent during the first five years of their taking on the home loan.
Lenders should also restrict their new lending such that no more than 15 per cent was at income multiples of 4.5 or more, the FPC stated.
After the FPC’s statements lenders’ appetite to lend at high income multiples reduced.
After peaking at 10 per cent ahead of the FPC rules coming into effect in mid-2014, the proportion of high income multiple lending eased back over the next year to just below 7 per cent.
But Mr Pannell said the picture has changed a lot over the last six months.
He said: “The incidence of high income multiple lending has increased sharply, especially for movers, and retraced a good chunk of the previous year’s reduction.
“According to our estimates, one of the FPC’s core indicators is now showing that income multiples are within a whisker of their mid-2014 peak.”
