In a significant development for the UK housing market, Nottingham Building Society has confirmed it will now offer 40-year mortgages to first-time buyers. This announcement represents a major shake-up of the lender's rules, designed to help younger purchasers get onto the property ladder.
Extended Mortgage Terms and New Lending Rules
The building society has removed its loan-to-value cap on lending into retirement, which effectively allows buyers to extend their mortgage term up to the age of 75. This policy shift means that individuals who might have previously been restricted by shorter repayment periods now have a longer timeframe to manage their debt.
Alongside this change, Nottingham Building Society has introduced additional affordability checks for applicants. These include taking into account confirmed future pay rises and employment prospects when assessing mortgage eligibility, providing a more comprehensive view of a borrower's financial trajectory.
The Pros and Cons of Longer Mortgage Terms
Longer mortgage terms typically come with lower monthly repayments, which can be particularly advantageous for cash-strapped first-time buyers struggling with high property prices and living costs. This reduced monthly burden can make homeownership appear more immediately accessible.
However, financial experts caution that extending mortgage terms carries significant long-term implications. Borrowers will likely pay substantially more in interest over the life of the loan compared to shorter-term mortgages. Additionally, building equity in the property happens at a slower pace, as each monthly payment contributes less toward the principal loan amount.
Broader Market Context and Income Threshold Changes
Nottingham Building Society is not alone in offering extended mortgage terms. Several other major lenders already provide 40-year mortgages, including HSBC, Halifax, Santander, Nationwide, Leeds Building Society, West Bromwich Building Society, and Yorkshire Building Society. This indicates a growing trend within the mortgage industry toward longer repayment periods.
This latest announcement follows another recent policy change from Nottingham Building Society, which reduced the income threshold required for buyers to borrow 5.5 times their income. The threshold has been lowered from £85,000 to £60,000 gross income, applicable to both individual and joint applications. This adjustment potentially opens up higher borrowing levels to a broader range of prospective homeowners.
AI Shopping Trends Revealed in Parallel Survey
In related consumer news, a new survey has revealed that almost half of UK shoppers would be willing to let artificial intelligence handle their shopping entirely. According to financial technology platform Adyen, AI shopping assistants—typically used for personalised product recommendations and online price comparisons—have seen their popularity more than double over the past year, rising from 12% to 28% across all age groups.
The study found that more than 18% of 16 to 27-year-olds and 15% of 28 to 43-year-olds used AI for shopping for the first time in the last twelve months. Notably, almost half (49%) of those aged 28 to 43 are now open to allowing AI to manage the complete shopping journey on their behalf.
Nicole Olbe, Managing Director at Adyen UK, commented: "Customers are moving past the 'browsing' phase of AI and starting to move towards the 'buying' phase. Almost half of UK shoppers are ready for AI that not only suggests products but actually completes the purchase. This shift will fundamentally change the checkout experience, and retailers must prioritise the underlying payment infrastructure to support both the security and the scale required."
The convergence of these developments—in mortgage accessibility and AI adoption—highlights how financial services and retail are evolving to meet changing consumer behaviours and economic pressures in the mid-2020s.
