Around one in five new first-time buyers took out mortgage terms stretching beyond 35 years in the first quarter of this year, according to a trade association.
Some 21% of people taking their first step on the property ladder had home loans lasting for more than 35 years, UK Finance said.
The trend of longer-term mortgages is “further evidence of the ongoing affordability crunch”, as costs and house prices remain high relative to incomes, UK Finance said.
Its review added: “Although the proportion of borrowing at up to 40-year terms eased slightly in (quarter one), it remains far higher than we have seen in the past.
“This is the case for all types of borrower, but most significantly amongst first-time buyers.”
UK Finance said most first-time buyers typically do not keep their mortgage over the full term because they move house or remortgage.
It added that lenders will always carry out an affordability assessment to check that the customer can afford the mortgage, including if the term stretches into retirement.
Its review said: “The small but increasing minority of both home-mover and remortgage customers borrowing at these longer terms points to more entrenched affordability issues.
“Rather than just stretching terms as a means of improving affordability in order to enter the housing market, more customers are needing to do this in subsequent mortgage transactions, further on in their home ownership journeys and their working lives.”
It continued: “The longer a customer needs to make mortgage payments, the less free income they may have over this period for other important considerations, not least contributions into their pensions.
“As such, this increasing trend of longer-term borrowing has the potential for wider societal implications, albeit that these may not come home to roost until some years down the track.”
Concerns have recently been raised that some home-buyers could be gambling with their retirement prospects by taking on ultra-long mortgages.
Sir Steve Webb, a former pensions minister who is a partner at LCP (Lane Clark & Peacock), obtained freedom of information (FOI) data supplied by the Bank of England, showing that 42% of new mortgages in the fourth quarter of 2023 had terms going beyond the state pension age.
And Legal & General Mortgage Services recently said that, in the first quarter of 2024, there was a jump in people aged 56 to 65 looking to move into home ownership.
UK Finance released its figures as part of its Household Finance Review for the first quarter of 2024, exploring trends across household spending, saving and borrowing.
Towards the end of last year, as mortgage rates started to reduce, there was a noticeable increase in the number of mortgage applications, according to the review.
But it said any sustained recovery has yet to materialise because market expectations for a Bank of England base rate reduction have shifted to later in the year.
The review said an “early stimulus” to mortgage demand this year “does not appear to signal a change from our forecasts – a picture of continuing, significant affordability constraints holding back activity through the year”.
Eric Leenders, managing director of personal finance at UK Finance, said: “Some households were in a better place financially in (quarter one of) this year, but we are not out of the woods yet.
“Cost-of-living pressures remain and, with 1.6 million mortgages due to come off fixed rates this year, there may be challenges ahead for some. If you are worried about your finances, your lender has help available – please contact them as soon as possible to discuss your options.”
Many lenders have signed up to a mortgage charter, which gives people who are struggling a range of options to suit individual circumstances.
UK Finance’s review was released as financial information website Moneyfactscompare.co.uk said that, in the week running up to May 31, the number of fixed mortgage deals for borrowers with a 10% deposit fell from 700 to 696, while the number of fixed deals for those with a 5% deposit fell from 329 to 326.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “The fact that a few lenders are withdrawing some higher loan-to-value products may raise eyebrows, but we are not seeing a mass exit.
“However, should more deals be withdrawn at higher loan-to-values, it may come as disappointing news to those who have a limited deposit, such as first-time buyers.
“The deals that have disappeared last week may well resurface, perhaps when re-pricing activity picks up in the coming weeks. Affordable housing is very much in short supply.”