Looking for comments on 50-year mortgages

Journalist: Lana Clements, Freelance

ended 04. July 2022

Hello, 

Just writing a quick story for Mortgage Solutions on the 50-year-mortgages that have been floated by the government. 

Looking for views on whether it's a good or bad idea? Could it work??

thanks

Lana 

7 responses from the Newspage community

Again they are putting a Band-Aid on the issue, the problem being a chronic shortage of property There were 13,229 new homes started on-site and 14,289 homes completed through programmes managed by Homes England between 1 April and 30 September 2021. The number of affordable homes started was 9,255 (70 per cent), a decrease of 7 per cent on the same period last year. Until we start building more affordable homes we wont fix the problem Source:https://www.gov.uk/government/news/homes-england-housebuilding-statistics-revealed
It's complete smoke and mirrors really. Being able to extend a mortgage term by an additional 10-15 years doesn't actually make much difference to monthly repayments. None of this does anything to address the issues of first time buyers being unable to save a deposit when renting is so expensive and the real root cause that no government seems to be able to or want to tackle, we need to build more houses. Until we do, getting on the ladder just becomes a more distant prospect for many.
It's a terrible idea and is about grabbing headlines rather than solving the problems of a lack of house building and stagnating wages. Instead, the government is lurching from one idiotic policy to another in an attempt to be seen as acting. Sadly, they have no strategic policies to solve the structural problems the housing market and economy more generally face. Furthermore, it flies completely in the face of MCOB rules around affordability into retirement, which would mean a re-writing of MCOB rules more generally to take account of such a ludicrous idea. Furthermore, it would cause house price inflation and over-leverage borrowers - the exact opposite of what is actually needed. Not to mention, who am I to saddle my child with debt? It should be filed where most of Boris's ideas need to be filed, in the bin.
In theory, there is no limit that could be imposed on the term of a mortgage, provided that the borrowers have the ability to maintain the payments. So a 50-year term for a 20-year-old would see them getting to age 70 at term end, many 20 somethings are already saying they can't see retirement before that age, or even 75 in some cases, so this is more the mortgage market evolving with the changes in society and our attitudes to our working life than anything more radical. My concern would however be that this would fuel further house price growth, rather than solve the problem at the root cause: we don't build enough houses in places people want to live. So, a more fundamental question is; should we be coming up with more innovative ways for people to take on more debt, or should we just be building more homes?
This is yet another example of the government trying to address the symptom rather than the cause: house prices are far too high. Is this really what we've come to, expecting people to sign up for half a century of debt, simply to prop up prices. As ever, the only beneficiaries will be the banks and housebuilders.
This is yet another headline grabbing gimmick by the government. This is of course likely to further increase house prices. Allowing people to borrow more is not the answer, we need a house building revolution and a housing minister who is allowed to stay in his job for longer than a year.
"It's a great idea as it will enable more people to get onto the property ladder as they can spread the cost over a longer period and therefore the monthly repayments will be lower. The downside is that they could be paying a mortgage for most of their lives. However, this is preferable to paying rent for their whole life as they will benefit from the (hopefully) from the growth in house prices."