Sales of mortgages with a 35-year term or longer saw a 70 per cent increase in March this year, the month of the original stamp holiday deadline.
Just over 25,000 mortgages with a term of 35-years or longer were sold in the month compared with 14,800 in March last year and 14,700 mortgages of the same length being sold in March 2018.
A freedom of information request submitted by Quilter furthermore found the number of these mortgages did not exceed 20,000 in the three years prior to March 2018.
March this year also saw the highest number of mortgage sales in the past three years, which Quilter attributed to the stamp duty holiday deadline of March 31, which was later postponed.
Charlotte Nixon, mortgage expert at Quilter, said for many borrowers, particularly first-time buyers, securing a mortgage with a 35-year term or more was the only way to afford a property due to the lower monthly repayments.
She said: “One of the largest knock-on effects of securing a mortgage with a term of 35 plus years is that the longer the mortgage term, the older you will be when making the final repayment.
“This means that people are likely to be borrowing beyond their retirement age.
“Whilst some mortgage providers allow this, paying a mortgage in retirement can have a major impact on standard of living with many people becoming unable to comfortably afford the repayments.
“Additionally, whilst a mortgage with a term of 35 plus years can result in lower monthly repayments, you are likely to pay considerably more in interest over the course of your mortgage term."
Meanwhile yesterday morning (August 16) the Bank of England published research suggesting borrowers “may be paying more attention to interest rates than to fees in their mortgage choices”.
In a 60-page staff working paper, the UK’s central bank said borrowers appear slightly more sensitive to interest rates than to origination fees, especially younger households with lower incomes.
“Overall, the demand parameters suggest that borrowers may be shopping across lenders and across products for low interest rates focusing less on origination fees,” the bank concluded.
Mortgage lenders have been cutting their interest rates to record lows. Just last month, Nationwide became the first lender in British history to offer a sub-1 per cent rate on a five-year fixed rate mortgage. Two weeks later, Halifax undercut the rate.
The Bank of England’s data suggests the gap between mortgage lenders’ interest rates and their origination fees began to widen notably following the Funding for Lending Scheme (FLS).