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Rising House Prices Drive Demand for Ultra-long Mortgages

Recent data from Eligible reveals a significant increase in the proportion of home loans extending into retirement, highlighting the impact of soaring house prices on mortgage terms.

Increase in Long-term Mortgage Deals
A freedom of information request by former pensions minister Steve Webb has uncovered a notable rise in ultra-long mortgage arrangements, with 42% of home loans in Q4 2024 extending to retirement age, up from 31% in Q4 2021. Zahra Hassan, co-founder of Eligible, attributes this trend to escalating house prices and fixed-term mortgage rates, stating, “The rising costs associated with the pursuit of home-ownership ought to encourage Brits to engage regularly with suitable product offerings and their own financial situation.”

Financial Literacy and Awareness
Eligible’s research highlights a worrying lack of financial literacy among mortgage customers, with 1-in-10 not understanding their mortgage terms. Moreover, 32% of Brits haven’t checked their credit score in the past five years, and 11% have faced long-term impacts on their borrowing and spending due to this lack of awareness. Hassan emphasizes the need for improved engagement, saying, “What’s needed – and what we’re doing at Eligible – is an active two-way dialogue, and AI-powered systems like Eligible facilitate this by initiating interactions with customers and monitoring their responses.”

Call for Improved Bank Support
Hassan calls on banks to proactively support customers, noting that 60% of Brits are unfamiliar with the term ‘forbearance’ and that financial jargon often complicates understanding. She suggests that technology can play a crucial role in enhancing customer support. “We proactively send educational content to customers to assess their anxiety levels and their understanding of their current financial products,” Hassan explains, advocating for more personalised and empathetic communication from lenders.

This shift towards longer mortgage terms underscores the need for increased financial education and proactive support from financial institutions to help consumers manage their mortgage commitments effectively.