Tamsyn Parker: Are you too old to get a mortgage?

If you're in your mid-30s and you've just bought your first home you're not alone.

First home buyers are getting older and taking mortgages out for longer pushing the repayment terms into retirement age.

In 1970 the average age of a first home buyer was 25 years old but these days it's more likely to be mid-30s.

There are no official New Zealand statistics on the average age of first home buyers but a study carried out in Australia found the average age had risen from 25 to 31 between 1970 and 2010.

Research by Westpac in New Zealand last year revealed the average first home buyer was 34.

William Cairns a mortgage broker with General Finance mortgage brokers said in his experience the average age of buyers was higher in Auckland and Wellington and lower in provincial areas like Palmerston North where houses were cheaper.

Cairns said the average age for first home buyers probably went over 30 in the mid 1990s and had been creeping up since then.

But he believes it's not just linked to the cost of houses going up and a squeeze on housing affordability.

"It's probably more of a reflection of people moving in together later and getting married later."

The average couple looking at buying a home was in their mid-30s with steady jobs planning to have a family.

Cairns said young people were also a lot more mobile in their work these days taking contracts to work overseas for six months and then coming home for a bit.

"We have got a lot more middle class itinerants. They don't have a fixed abode which means they also run into trouble with the banks who like to see steady employment."

Bruce Patten, a mortgage broker with Loan Market, said most first home buyers he saw were in their 30s.

"I do do loans for a few people in their 20s but most of those are being helped by family to get on the property ladder."

Patten said restrictions on bank lending introduced in October last year had not helped and the longer they were in place the higher the age could be pushed.

"It's scary to think you are not able to buy something until your mid 30s."

STRETCHING THE DEBT FOR LONGER
At same time as the average age has risen the typical term for mortgages has stretched from 25 to 30 years, pushing the term close to the age at which people become eligible for New Zealand Superannuation - currently 65.

Patten said 10 years ago the typical term of a mortgage was 25 years but now it was 30.

"99.9 per cent of first home buyers would take that term."

The term extension is a win for the banks who get more interest.

It also lowers the repayments allowing people to borrow more.

Patten said the longer someone stayed in the same property the better able they were to reduce their debt. But most people moved every five to seven years and stepped up typically adding to their debt.

Each time they moved their mortgage was also re-set so they went back to the beginning paying more interest and less principle.

Patten predicted the higher the age gets the harder it would be for people to pay off their debt before retirement.

"It just means fewer people owning homes."

As people got older people they also began to believe it was too hard to buy a property, he said.

ROBBING KIWISAVER TO PAY THE MORTGAGE
In Britain some banks are requiring borrowers in their 40s to have a private pension to ensure their mortgage repayments can be covered into their "golden years".

Patten and Cairns said the same thing could happen in New Zealand with KiwiSaver.

"It is obviously going to happen. But we have to be very careful KiwiSaver is not used as an excuse to take on more debt," said Patten.

Patten said using KiwiSaver to pay off a mortgage at retirement was not ideal as it took away a person's retirement funds.

But he said it was situation that was already occurring in Australia where superannuation was compulsory.

"People are borrowing beyond their retirement age and ending up with more debt."

Patten said in New Zealand people in their 30s and 40s could still get a 30 year term with a bank but he was seeing more people in their 50s trying to take out large home loans after a relationship break-up or in the wake of losing money during the global financial crisis.

Some banks already had caps on the age at which a person was allowed to have a mortgage term to.

TOO OLD TO BORROW
Patten said Kiwibank typically did not lend past 70 years old for owner occupiers while Westpac had a cap of 75. ASB and ANZ went on case by case basis.

A spokeswoman for Westpac said it did allow people in their 40s to take out a 30 year mortgage but if the term of a loan exceeded the estimated future term of a borrowers earnings the bank asked the customer to come up with a strategy to repay the loan or reduce it.

"Most borrowers will consider their options if they were to lose (or reduce) their income before the loan is fully repaid.

"There are a number of scenarios that could come into play for example, children leaving home meaning an increased ability to make extra repayments or investments that continue to provide an income."

The spokeswoman said most customers who took out a home loan with a 30 year term did not take the full 30 years to repay it.

"Through various changes like moving houses, restructuring their loan and making additional payments, the majority of the time the loan is paid back faster."

She said the future balance of any superannuation was not currently a factor in applying for home loans.

ANZ also said it did not rely on KiwiSaver for debt repayment.

"We consider each home loan application on its own merit, on a case-by-case basis. Based on this analysis we will in some cases lend to customers of that age (in their 40s) on a 30-year term where we are confident they can comfortably repay their debt.

"We'll only lend to a customer where we're confident they can comfortably repay their debt."

What age were you when you first bought a house? What term did you take it on?