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Are 40-year mortgages old hat?

Journalist: Tom Haynes, Daily Telegraph

ended 01. November 2024

UK Finance statistics show that only 390 new mortgages were taken out with a fixed term of longer than five years in August, down from 1,690 in March last year. These European-style mortgages comprised just 0.48 per cent of all new loans.

Looking to hear from brokers and borrowers. Why have much-hyped 40-year mortgages flopped? 

9 responses from the Newspage community

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Rachael Hunnisett
Director at April Mortgages
The UK mortgage market is dominated by lenders offering short-term fixed rates, so much so that these options have become the unquestioned norm.

But the flaw lies in choosing a short-term rate without considering the borrower’s risk tolerance, as it leaves homeowners uncertain about their mortgage payments beyond two years.

It's interesting that when borrowers are asked if they are comfortable with such risk on what is often the largest debt of their life, very few consciously choose the high risk option.

The issue lies with the lack of options widely available to borrowers that combine long-term certainty with the flexibility if a homeowners wants or needs to move home

Lenders, including ourselves, have recognised that borrowers need viable alternatives to shorter term mortgage products that don't make them feel like they are playing the mortgage roulette wheel."
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Ben Perks
Managing Director at Orchard Financial Advisers
Over recent years borrowers have endured; Covid, Cost of Living Crisis, Political turbulence, Trussenomics and a battle against inflation. It was thought that many people would want certainty and lock into deals for longer. But it seems the opposite is true. People want flexibility and the option to review and change arrangements more frequently.
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Jack Tutton
Director at SJ Mortgages
I can't say that we have had many customers wanting to take their mortgage over such a long time. Personally, I think people are much saviour when it comes to looking at what they can afford with clients basing what they can borrow on a planned monthly budget. This is in comparison to only a few years ago, prior to the interest rate rises we have seen, where people wanted to borrow the maximum that they could. This may have been a time when 40 year mortgage terms may have been more attractive.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Long term products and tie-ins have never been in the UK homeowner mentality, and would need to be cheaper than they are currently to break through the established marketplace. The current mortgage rates being near-peak also make borrowers unlikely to want to fix in for longer terms if they feel rates will be coming down over the next few years.
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David Stirling
Independent Financial Advisor at Mint Wealth
Lender competition in the realm of 10-40 year fixes and the number of products available is so low that it is unlikely to ever gain a significant percentage of borrowers. The main issue with longer term fixes are the punitative early repayment charges if you want to exit the deal if circumstances change or better deals arise. The security of longer term fixes will appeal to a some borrowers however. New lenders such as Perenna are trying to take market share by offering flexibility in their long-term fixes that weren't previously available, such as being able to switch out after 3 or 5 years. Whether the uptake on these types of products will increase over time will depend if we get some stability in the economy and a period of rate decreases, in which case long-term fixes would remain mostly unattractive to borrowers.
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Dariusz Karpowicz
Director at Albion Financial Advice
Turns out Brits aren't keen to sign up for a mortgage that's older than their vintage port collection. The lukewarm reception of 40-year mortgages in the UK isn't surprising - we're a nation that still cherishes our pounds over euros and tea over coffee. While these extended terms promised lower monthly payments, they've fallen flatter than a Yorkshire pudding on a bad Sunday.
The traditional British reserve extends to our financial choices. Most homebuyers balk at the idea of debt lasting longer than a royal reign, preferring the familiar territory of shorter-term mortgages. Perhaps it's our inherent pragmatism, or maybe we simply can't fathom still paying off our homes when our grandchildren are applying for their own mortgages.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
The idea of a 40-year fixed mortgage promises a continental charm —stability, certainty, and perhaps a less frenetic approach to home financing. But in practice, they’ve flopped spectacularly here in the UK, and it’s no surprise why. Most buyers aren’t keen to tie themselves down for four decades when life itself is a series of surprises as we have seen since 2016. What’s more, the premium on these mortgages is hardly attractive in a market already shaken by high interest rates and rising costs; it feels more like a ball and chain than a mortgage. For landlords and homeowners alike, the lack of flexibility is a real sticking point. The British market thrives on the “move up the ladder” mindset—buy, build equity, and eventually upgrade—yet a 40-year mortgage demands a commitment most Brits aren’t ready to make. Brokers know that long-term fixes might look stable on paper, but practically they will be turkeys cheering for Christmas, as there's no product transfer to sell every 5 years.
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David White
Chief Operations Officer at Simply Lending
The concept of a lifetime fixed-rate mortgage isn’t necessarily a bad idea; however, it would require enough lenders to offer it to foster competition, along with a concerted educational effort to shift perceptions of what is considered 'normal.' Many people still view a standard mortgage term as 25 years, with a new deal obtained every 2 or 5 years. Over time people have been conditioned to see this as the norm and it would take a significant effort to change this perception.
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Dennigan Tyson
Mortgage & Protection Adviser at Pia Financial Solutions
I think it is a balance of two things with firstly the introduction of Consumer Duty by the FCA and an increase in customer knowledge.

From my own perspective and advice remit, I don't really offer 40 year terms. The reason being is that when I show calculations to clients, they are often horrified at the interest and capital algotherims that a 40 year term has. As advisors, we need to present advice which is clear and concise and I think that Consumer Duty and Vulnerable customer policies have scrutinised the nature of advice given , especially with 40 year mortgages.

Customers are now also more knowledgeable and I think this has resulted in 40 year terms becoming less as customers are not keen on the high level of interest that 40 year mortgages generate.