Brokers have claimed that 40-year mortgages are a "bonkers" idea that will leave customers "more vulnerable" to interest rate changes.
Following talks of "Dutch-style" long-term mortgages being discussed in government, The Mortgage Expert's Darryl Dhoffer argued this could mean more interest for consumers.
He said: "With a 40-year mortgage, you'll be paying interest for a longer period.
"This means that you'll end up paying more interest overall."
He also pointed out: “You'll be more vulnerable to interest rate changes too: if interest rates reduce, you could be losing out on lower repayments if you are tied into a 40-year mortgage with high early repayment charges."
Dhoffer was not alone in his assessment as many brokers were against these long-term mortgages.
One such example is Shaw Financial Services owner and mortgage expert, Lewis Shaw, who said: "This is a terrible idea and a knee-jerk reaction to a transient problem."
Shaw explained: "More credit means higher house prices, which means home ownership becomes out of reach for even more aspiring first-time buyers.
"This doesn't solve the problem but would only exacerbate it."
This sentiment was shared by EHF Mortgages managing director, Justin Moy, who said: "Anything much longer than five years would be dangerous for first-time buyers."
Moy explained that, typically, this is one of the client types that suffer most from early redemption, so any longer-term products for first-time buyers are not going to be popular.
"Longer-term mortgages to aid affordability are going to be a feature of our market, but longer-term products will have limited appeal," he added.
Though these kind of longer term mortgages were found to be unpopular amongst brokers, Rebus Financial Services co-founder, Neezam Romjon suggested they may soon be common in the market.
Romjon said: "I suspect 40-year term mortgages will soon be the norm amongst first-time buyers and home movers increasing their mortgage debt.
"As 1 per cent mortgage rates disappear into the aether and house prices continue to rise, we're already seeing more interest from borrowers stretching out their mortgage term to keep the monthly payments affordable."
The bright side
However, some brokers welcomed the idea of 40-year mortgages with Altura Mortgage Finance managing director, Rob Gill, saying that "the UK property market in general needs longer-term thinking and such fixed rates should be part of the solution".
R3 Mortgages founder and director, Riz Malik, also said the UK should think about using long-term fixed rates.
However, Malik cautioned that whether these longer-term rates work out or not depends on how flexible they are.
"If they let people pay more than they have to, be transferred, and don't have any serious limitations, then people might start using them," he explained.
Lawson Financial Ltd director and mortgage and protection adviser, Michelle Lawson, commented: "As with all mortgages, some are right for some and not for others and different people have different thoughts and goals.
"This is the reason for the diverse options and choice available."
tom.dunstan@ft.com
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