Text 6：LifeSaver － or a Life Sentence?

1    Growingnumbers of first-time buyers desperate to get on the housing ladder butstruggling to afford sky-high house prices are being encouraged to tiethemselves into mortgages（抵押） lasting 35.40 or even 45 years.With today’s buyers requiring ever-larger home loans, some banks and buildingsocieties have come up with a clevertrick for bringing the dream of home ownership within their reach: increasing the term of the loan in order toreduce the monthly payments. But it’s a trick with a nasty catch. While － your monthlyoutlay（花费） will be lower, by the time the deal comes to an end you’ll have paid farmore － perhaps an extra £150,000－that if youhad a standard 25-year mortgage.

2    RobertMclean, 36, recently signed up for a mortgage with Northern Rock in which he isbeing allowed to pay back over 35 years, by which point he will be 71. Herecently bought a two-bedroom house with his wife, and was offered a five- yearfixed-rate deal with an initial rate of 6.2%. To offset this high interest ratethe bank recommended its Together mortgage, which allows the couple to borrowmore than most high street lenders allow and to stretch the term of the loan.Mr. Mclean (not his real name) does not have a permanent job but works oncontract in the public sector（部门）. Despite this, he says the bankallowed him and his partner to borrow more than four times their jointearnings. “They asked what my job was and if I worked part-time. Nothing aboutcontract working. Then they wanted to know how much we earned and if we had anydebts on credit cards or loans,” he says. “For us it was a no-brainer becausethe monthly payments were only a little above the rent we were paying.”

3    As forthe future, the couple hope their finances will improve dramatically over thenext few years, enabling them to pay off the mortgage before they retire. Theyare not the only ones who are being offered the option of going long on theirborrowing. If the trend for extending people’s mortgage terms accelerates, itcould mean we end up waving goodbye tothe traditional 25-year loan. Already in the United States, most major banksnow offer 40-year mortgages.

4    It allhas frightening echoes of the Japanese property bubble of a few years back,when absurdly high property prices led to the development of 100-yearmortgages, which were designed to be paid off by the borrower’s children andgrandchildren. On the face of it, the maths of mortgage stretching looks prettygood. If you signed up for a £200,000 home loan to bepaid back over 25 years you would pay £1,140 a month in the first two years and£1,329 a month for the remainder of the term, assuming a two-year tracker rateof 4.79%, which then converts into a6.5% standard rate. That monthly repayment after two years falls to £1,157 － a saving of£172 a month or more than £2,000 a year － if you increase theterm to 40 years. For those with tight finances, that £172 a month saving couldbe the difference between getting on the property ladder and being forced tocontinue renting. But those lower payments come at a price. After 25 years, youwould have handed over a total of £394,241 in mortgage payments, based on theabove example. But with a 40-year term, the total amount repaid soars（高涨） to £549,931. Stretching the life of a loan over several decades meanspeople could be storing up serious problems for the future. If during theintervening years they have not taken action, such as shortening the mortgageterm or making overpayments in order to reduce what they owe, they could end upstill paying off their mortgage years after they have retired, out of whatevermeager pension income they are living on.

5    NorthernRock isn’t the only lender willing to let people borrow over a longer period oftime. Cheltenham & Gloucester will let home buyers repay their mortgageover a period of up to 35 years, while the Halifax, HSBC. Coventry BuildingSociety and Ulster Bank are among those that will go up to 40 years.Intriguingly, the Coventry will allow people to have a mortgage that lastsuntil they are 85 years old. Last month, Bradford & Bingley trumped themall with a deal that boasts a maximum term of 45 years. However, to be fair,this is a mortgage aimed at young professional first-time buyers training to besolicitors（初级律师）, accountants and the like,whose incomes are highly likely to increase substantially over the comingyears.

6    BrianMurphy at independent home loans broker Mortgage Advice Bureau is one of thoseconcerned about the current trend. “Stretching a mortgage term to lower thepayments is a risky business,” he says. “We always advise clients to keeprepayments to as short a term as possible, to enable them to free up money forpreretirement investments.” Mr. Murphy says borrowers probably don’t set outwith the intention of seeking a mortgage that will last for 30 or 40 years, butwhen they look at the cold hard economics of how much it is going to cost them,some will decide the only way they can afford the property they want is to gofor a longer term.

7    RayBoulger has for some years been predicting a shift towards longer-termmortgages in the UK. He believes that for the right people in the rightcircumstances, opting for a longer borrowing period can be a sensible solutionto the problem of affordability, but adds: “In the wrong hands it can be dangerous.”While everyone should aim to pay their mortgage back by the time they retire,with the state retirement age moving up to 68 by 2044 and people living longer,it is perfectly reasonable to expect mortgage borrowers to be retiring later infuture, says M. Boulger. Someone aged 36 now who takes out a 35-year home loanwill almost certainly not keep that mortgage until they are 71 － they willprobably remortgage and move house. “As soon as you can afford to pay more, youshould shorten the term or make overpayments,” he adds.

8    We askedNorthern Rock about Mr. McLean’s case. A spokeswoman says 35 years is themaximum mortgage term that it offers, adding: “It is unusual for someone totake out a mortgage for that length of time.” However, she says it is an optionfor people who want to keep their payments very low. Provided borrowers havearrangements in place to continuemaking repayments after they retire, Northern Rock will lend to them.

9    Somemight say that if house prices continue to rise in excess of earnings, the onlyway repayments can remain affordable is by increasing the term of the loan. Butothers will say this is a ticking time bomb, the tactics used by those loan consolidation （合并）companiesthat offer people the chance to bring all their debts together into “one easypayment” that is substantially less than their current monthly payments － but which dothis by spreading them over a much longer period, meaning more interest ispaid.

Activity 1: Fill in the blanks with appropriate wordsor verb phrases.

Property ________地产泡沫    ________ finance 拮据     

Monthly __________月供       make ________ 提前还贷

__________the mortgageterm延长贷款期     ________ a loan 还清贷款

Activity2:Isolate the key information from the text, then illustrate the line ofreasoning of the argument with a graphic organizer.