Taylor Wimpey, one of the UK's major housebuilders, reported a significant increase in customers opting for longer mortgage terms to manage monthly repayments. The company noted that
27% of first-time buyers are now choosing mortgages lasting over 36 years, compared to 7% in 2021. Similarly, second-time buyers are also extending mortgage terms, with 42% opting for more than 30 years, up from 28% in 2021.
Extending mortgage terms can reduce monthly payments, making homeownership more affordable for customers. However, this also means paying more overall due to the extended repayment period. The rising mortgage rates, linked to the Bank of England's efforts to control inflation by raising interest rates, have led to a challenging backdrop for customers.
The housebuilder highlighted that the higher mortgage rates have had an inevitable impact on its results. Nonetheless, Taylor Wimpey anticipates selling between 10,000 and 10,500 homes by the end of the year, representing the upper end of its expectations. In the first half of the year, the company recorded a profit of £238 million, which was 29% lower than the previous year.
On another front, estate agents Connells, owned by Skipton Group, experienced a net loss of £5.8 million in the first half of 2023. The fallout from last year's mini-budget, which caused a slowdown in the housing market, affected Connells' sales. However, the company noted that the proportion of sales to first-time buyers had increased.
As the Bank of England is expected to raise interest rates again, mortgage rates continue to soar, with the average two-year fixed rate standing at 6.85% and the five-year rate at 6.37%, according to financial information service Moneyfacts. Additionally, Halifax, among other lenders, has extended mortgage options up to the age of 75, compared to the previous maximum working age of 70. These measures reflect the challenges faced by homebuyers amid the current economic climate and the efforts of the housing market to adapt to the changing financial landscape.