(Bloomberg) -- First-time home buyers in the UK are stretching themselves as they struggle to purchase property, with more people saddling themselves with mortgages that will take longer than ever to pay off.
The average term of a home loan taken out by a first-time buyer in June hit a record 30 years, according to data compiled by UK Finance. That compares with 25.5 years in 2005 when the industry lobby group began compiling the data.
Soaring demand for houses during the pandemic has pushed prices to levels that are more unaffordable than ever. Meanwhile, the Bank of England is raising interest rates as it predicts the economy is heading for a recession lasting more than a year. Mortgage approvals fell in June by more than forecast.
Borrowing over a longer term allows people pay more for properties because monthly repayments are spread over more time. Britain’s ruling Conservative Party has floated the possibility of 40-year or 50-year fixed-rate mortgages to bolster the housing market.
First-time buyers spend an average of almost £225,000 on their home, property portal Rightmove said last month.
More than three million homeowners are due to see their fixed-rate deals expire either this year or next, UK Finance has said previously.
(Updates with average price paid by a debut purchaser. An earlier version of this story was corrected to show the data refers to first-time buyers)
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