Strapped for cash: young adults paying 59% more for mortgages

A recent survey conducted by Uswitch.com has revealed that young adults are unfairly impacted by the state of the mortgage market.

The report, which surveyed over 2,000 UK homeowners, discovered that 18–24-year-olds spend on average £1,390.90 a month in mortgage repayments, the highest of all age brackets – 59% more than 25-34 year-olds, where the average monthly payment is £874.35 and the second most expensive.

Although, the greater the age gap the greater the difference in payments. Those aged 55 and older have the cheapest monthly repayments, averaging just £763.79. Whilst there may be a number of reasons behind this, house prices tripling in the past 20 years is likely to be a major factor.

According to analysis completed by Halifax, UK house prices have more than trebled in the last two decades, with first-time buyers facing the greatest rise.

The leading bank organisation revealed that the average price of a home has risen by an astonishing 207% in the last 20 years and has increased by 239% in Greater London since 2000.

As well as researchers discovering younger people pay more than their older counterparts, experts found 0.99% of young adults have monthly repayments exceeding £3,000.

The report, which can be viewed in full here, shows 25–35-year-olds have the longest mortgage terms, with 57.25% of homeowners in this age bracket having a mortgage term of 30 years or longer. 

In comparison, the average length of a 55-year-old’s mortgage is just 22.73 years. People within this age bracket may also be the last to see a period this short as the recent introduction of 50-year mortgages in the UK could increase mortgage terms for young people in the future.

Whilst fixed-rate mortgages, where the interest you’re charged stays the same for a number of year, were found to be the most popular across all age brackets, they are utilised far less by 18-24-year-olds.

Younger people were found to gravitate towards tracker mortgages, a flexible mortgage that follows the market, which could now potentially result in higher bill costs due to the recent increase of interest rates by the Bank of England.

Photo by Tierra Mallorca