Is the mortgage market today still affected by the financial crash?
Yes, house prices have dramatically increased over the last 10 years and homebuyers have to wait longer to save up the deposit needed to get on the property ladder. This is causing them to take out longer mortgages with lower repayments that are more affordable. Join Personal Loans Now and explore the FCA mortgage statistics 10yrs after the crash.

ls the Mortgage Market Today Still Affected by the financial crash? Personal Loans Now

Learning Highlights
  • The changes that the report shows
  • Longer term mortgages
  • The number of people taking them
  • The volume of mortgages that people take
  • How the types of mortgages have changed
  • Conclusions

FCA Mortgage Statistics Report

The recent report from the FCA, which analyses mortgage data collected over the last 10 years, has revealed a different marketplace from that of before the financial crisis. It showed that first-time buyers will be paying their mortgage until they are past 65. Many for even longer as people will be working right up to their seventies.

The dream of retiring will be out of reach for as many as 22% who will still be making their monthly repayments at that time in their lives. The reasons for this is that house prices have increased dramatically since the financial crash. Homebuyers have to wait longer until they have saved up a large enough deposit to get on the property ladder. This is causing these first-time buyers to take out longer mortgages with lower repayments that are more affordable.

Lower Monthly Repayments for Mortgage Holders

Homebuyers are opting for lower monthly repayments that will be more manageable after years of low wage growth and the high price of housing. By spreading the long term loan over a longer period of time their monthly repayments will be less but the interest that they will pay by loaning the money for longer will mean that they will pay almost 50% more for their home. FCA analysis pointed out the fact that a £200,000 mortgage taken out at 3% for a 35-year term as opposed to the more usual 25-year term will mean that the borrowers will pay back £38,723. That amounts to 46% more than a traditional mortgage, clearly showing that having affordable repayments comes at a high price.

In 2016 only 1.08 million mortgages were taken out compared to 2.1 million in 2007. - Personalloansnow

Are More People Taking Longer-Term Mortgages?

The FCA data reveals that in 2007 the number of homebuyers who took a mortgage for longer than 25 years was just 17%. By 2016 this figure had more than doubled to 39% and half of those were for more than 30-year mortgage terms. The regulator also analysed the number of first-time buyers and found that there were 7% less new buyers in 2016 than in 2007 but after the financial crash of 2008, the figures for 2016 were 69% higher. There has been much written in the press recently about how difficult it is for first-time buyers to get their foot on the property ladder and the data clearly reflected this with only 22% of new buyers aged between 18 – 35 compared to 30% in 2007.

So what have we learned so far?

  • The FCA mortgage statistics shows new trends and many changes in the mortgage market over the last 10 years
  • 22% Of mortgage holders will still be paying their mortgage at 65 years old
  • Affordability and needing longer to save are causing people to take out longer-term mortgages
  • Many are opting for a lower repayment plan after years of low wage growth
  • Borrowing the money for longer means a 35-year mortgage costs 46% more than a 25-year term
  • More than double the number of people are taking longer-term mortgages than in 2007
  • Only 22% of new buyers are between the age of 18 – 35 compared to 30% ten years ago

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Are the Same Number of People Taking Mortgages as in 2007?

Another interesting fact revealed by the FCA mortgage statistics is the volume of mortgages taken out today compared to 2007. In 2016 only 1.08 million mortgages were taken out compared to 2.1 million in 2007. The smallest decline in those mortgages were the ones for first-time buyers who were backed by the government’s Help-to-Buy scheme. These statistics reflect the growing rental trend in the UK and support the findings of data supplied by a government housing survey which showed that since 2004 the UK rental market has doubled in size and that home ownership is at the lowest levels since 1985.

Have the Types of Mortgages Changed Over the 10 Year Period?

The report from the FCA has also shown a trend towards fixed rate mortgages over the last ten years. In 2007 fixed-rate mortgages accounted for 73% of the loans market compared to 89% in 2016. Due to the tightening of regulation of the mortgage market, there was a sharp fall in the number of interest-only mortgages. In 2007 they accounted for 32% of mortgages compared to just 4% in 2016. Since the financial crisis, there have been less high loan-to-value mortgages granted. Loans with more than 90% LTV only accounted for 9% of the market compared to 14% in 2007.

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Conclusion – FCA Mortgage Statistics 10 Years after the Financial Crash

The FCA collected UK mortgage lending statistics over the last ten years that shows many differences between borrowing habits of 2007. The trend towards longer mortgage terms is a clear reflection of how much people are struggling to pay their bills through years of wage caps that have not allowed wages to rise with inflation, causing many people to suffer wage cuts in real terms.

Although the mortgage repayments will be more manageable for this group of borrowers it will mean that they will have to continue working and paying their home loan for longer, for many beyond 65. The number of mortgages being taken out has halved and due to regulation. The types of mortgages that were interest-only have reduced drastically. The UK rental market has doubled in size. This could be one of the reasons for the cut in mortgage applications.

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