Squeezed homeowners opt for longer mortgage terms

More homeowners are extending their mortgage terms to reduce the pain of higher rates when their cheap deal ends. Some 24 per cent of remortgages, about 5,400, were taken on terms of 30 years or more in December, the trade association UK Finance said. This is up from 11 per cent, or 2,864 loans, in December 2021.

Millions of homeowners who had been on a mortgage rate of 2.5 per cent or below face paying much more since the Bank of England base rate rose from 0.1 per cent in 2021 to 5.25 per cent today. The average two-year fixed-rate deal is now 5.81 per cent, and the average five-year fix is 5.39 per cent, according to the financial data firm Moneyfacts.

About half of