A new lender hoping to offer 50-year fixed rate mortgages has been given a UK banking licence.

With the housing market looking increasingly unaffordable for many, Perenna believes the loans will help younger people get on the property ladder as longer mortgages will lower monthly repayments. But critics say they will see buyers paying back more in the long run.

The start up will first offer 30-year fixed rate mortgages before lending for longer terms.

Former Prime Minister Boris Johnson previously mooted the idea of family mortgages that could be passed on to children when the homeowner dies, as home ownership looks out of reach for many first-time buyers.

House prices have surged in the last few years as demand far outstripped supply in the wake of the coronavirus pandemic. Many re-evaluated their property needs with a desire for a bigger home, or a new location due to the new-found ability to work from home. Plus the stamp duty holiday saw buyers bidding higher than they may have done to secure properties before the tax cut deadline.

The era of rapid, double-digit house price growth seen during the pandemic seems to have ended. According to more recent Halifax data, the average UK property now costs approximately £300,077, representing a year-on-year change of +1% rather than the 11.8% growth previously recorded.

While inflation famously peaked at over 10.1%, it has since dropped significantly, helping to stabilize the broader economy. To combat that peak, the Bank of England base rate climbed to a high of 5.25% in 2024. However, as of early 2026, the base rate has begun to fall, sitting at 4.5% to 4.75%. While lower than the 2024 peak, these rates mean mortgage repayments remain substantially more expensive than they were during the record lows of the last decade.

Arjan Verbeek, chief executive and founder of Perenna, which hoped to start offering loans, said: "Rates are going up and if you have a household budget to manage, you need to know what you’re paying on your mortgage every month.

“With inflation running high, this will take a chunk of the stress out."

Long term mortgage deals are hard to come by, with most UK banks and building societies only offering up to 10 years.

However start-up Habito offers 40 year mortgages.

Another online mortgage provider, Kensington, also offers 40 year fixed rate loans.

With average fixed-rate loans now hovering around 5.23%, the specific rates for these 40-year products have adjusted upward; for example, a typical 40-year fixed rate at a 60% loan-to-value (LTV) is now significantly higher than the previous 4.34% mark.

Pros of a 50 year fixed rate mortgage

One of the main benefits of a long term mortgage is cutting monthly repayments as they are spread over a longer period of time. This makes it much more affordable for first time buyers or those with low incomes to get onto the housing ladder.

Using a more recent average London home price of £531,141, the potential savings of a 50-year term become even more apparent. For a first-time buyer borrowing 90% LTV over 25 years at a current average interest rate of 5.35%, monthly repayments would be approximately £2,895. Spreading that same loan over a 50-year term would reduce those monthly repayments to roughly £2,240, providing a vital monthly cash-flow buffer in a high-interest environment.

Rising house prices and general living costs mean many are taking out interest-only mortgages because the high payments are simply unaffordable. But when it comes to the end of the mortgage they don’t own the property and still need to repay the full amount owed. Spreading the cost over a longer period will ensure repayments are reasonable and the property belongs to the mortgage holder at the end of the term.

The other thing to consider is the value of money. A monthly repayment of, say, £1,500 may feel like a lot of money in 2022, but after decades of wage rises and inflation, that £1,500 will likely be a much smaller percentage of a homeowner's income.

Secondly, although interest rates on these long term loans are much higher than two or five year fixed rates right now, this may not be the case in a few more years as the Bank of England grapples with soaring inflation. Bill payers with a 50 year mortgage will have stability over their monthly payments - the cost will never change - taking the volatility and stress that comes with it out of the equation.

After the base rate climbed to a peak of 5.25% in 2024, the market has entered a post-peak environment. While the base rate has since fallen to 4.5% to 4.75% in early 2026, rates remain far higher than the near-zero historic lows of the 2010s. Consequently, borrowers are no longer seeing the ultra-cheap deals of the past and are increasingly looking for long-term stability to protect against future market volatility.

Cons of a 50-year fixed rate mortgage

The obvious con of a long term mortgage is a holder will repay more money in the long run. With more people suddenly able to get onto the property ladder, this will likely inflate the market even further, as demand increases even more. Many see this as a short term idea which could drive up house prices even further.

With such long mortgages, there is the chance that a customer could still be repaying the loan way after retirement. This isn't necessarily affordable, especially if relying solely on the state pension.

The other problem is if one or both of the mortgage holders dies. If a spouse takes sole responsibility for repaying the loan, they may not be able to afford it. The debt could also be passed on to children if they inherit the property.

Some long-term mortgage providers do allow overpayments, and some even for free. If a long-term fixed rate mortgage is the only way someone can get onto the property ladder, it could be prudent to may overpayments when possible to shorten the length of the loan.