When you are in mortgage-hunting mode, the length of time it will take to pay off the loan tends to be little more than a background issue, writes Una McCaffrey.
You may pay some passing regard to the mortgage term when you sign up to a particular lender, but the decision is more likely to be based on minimising repayments than on the age you might be when the loan is finally paid off.
After all, the idea that extending the loan from 25 to 30 years might knock €100 off the monthly repayments is more likely to excite than the knowledge that you will either be 55 or 60 when you pay off the loan.
The truth is that you and this loan (your first for argument's sake) are likely to part company long before it runs anything close to its full term.
Surprising as it may seem, the average length of time we will spend with our mortgage will be six-and-a-half years - at least that's if a new analysis from Davy Stockbrokers is to be believed.
Davy, no stranger to the calculator, has worked out our average mortgage term as part of an analysis on how reliant banks and building societies are on homeloans for their profits. The figure of six-and-a-half years comes out of a mixture of information published by the Department of the Environment and an analysis of the bank's own balance sheets.
So where does this alarmingly short term come from in practice?
Well, Davy reckons it has a lot to do with market "churn" - the process whereby mortgages are moved, or switched mid-term, from one lender to another to benefit from, in most cases, a better rate.
There is also the growing area of equity release to consider, with each such transaction counting as a discrete loan for the purposes of Davy's analysis.
The broker quotes figures from AIB, for instance, which show that less than two-thirds of the bank's new loans are used for actual house purchases. It seems safe to presume, therefore, that the remaining 40 per cent will carry shorter terms.
It also seems safe to conclude that the breakdown between mortgages for house purchases and those taken out for other purposes (with shorter terms) is likely to be even more stark in the case of lenders, such as Ulster Bank, which has made huge efforts in the past few years to win mortgage switching business.
Davy points out that the average loan term it has calculated is considerably lower than the equivalent figure in the UK, where the typical mortgage lasted for just 3.8 years in 2003. The high level of switching in the UK is the main factor behind the differential, with Davy expecting the growth in incentives (Ulster Bank offers to pay switching legal fees, for example) to bring the Irish average down over coming years.
It will remain far from the UK figure in the near term, however, according to the analysis. Davy reckons that the average mortgage life will drop from six-and-a-half to six years in 2004 and then to five-and-three-quarter years in 2006, the broker says.
This conclusion is based on equity release and market churn growing by 5 per cent each year, with further growth blocked by a lack of incentives.
