The trend to longer home-loan life, which has been observed in a number of commentaries in recent months, is likely to be a long-term change, as households reduce their borrowing levels and house price growth continues to be subdued.Broker Mortgage Choice reported in August that the average life of the A$42.4 billion of loans on its books has increased from 3.5 years in 2006 to the current average of five years.The run-off rate of the Mortgage Choice book has declined from 22.3 per cent in the 2007/08 financial year to 14.9 per cent in the year to June.Fujitsu Consulting's executive director, Martin North, said his data showed that the average life of a mortgage had increased from around 28 months four or five years ago to 45 months now. He said there were two reasons for the change. Lower growth in house prices meant that people were holding on to properties for longer and were re-financing less often. And, with interest rates unchanged for almost a year, there was less incentive to shop for a new loan.BIS Shrapnel's managing director, Rob Mellor, said he agreed that lower growth in house prices was a factor in longer loan life.Mellor was speaking at the presentation of QBE LMI's annual housing outlook. He said more moderate housing price growth would prevail for years to come. "We had a one-off boom that started in 1996 and ended in 2003," he said."Our view is that the long term prospect is for a real rate of growth of about two per cent a year, giving a nominal rate of 4.5 to five per cent. Sydney will be stronger than the rest of the market."Mellor said the other factor contributing to longer loan life was the ageing of the population. "Baby boomers took on a lot of debt in the boom years, but now they are staying in their homes or downsizing."Household borrowing behaviour is returning to normal long-term patterns."This change has had an impact on the dynamics of the industry. For lenders, longer loan life makes a loan more profitable.Lower run-off rates and reduced origination volumes mean reduced upfront commissions for brokers. But, on the positive side, they mean more stable trail commission income.Faced with fewer mortgage settlements, brokers are looking to diversify their businesses.Issuers of mortgage-backed securities are having to make changes to the structure of their offers. National Australia Bank's most recent RMBS transaction included a tranche of soft bullet notes. No principal will be paid to the A1 note-holders prior to the scheduled maturity date, which is on the second anniversary of the issue. Any principal that would have been paid to A1 note-holders will be directed to A2 note-holders.National Australia Bank's senior treasury manager, securitisation and funding, Eva Zileli, said domestic investors had a preference for notes with a weighted average life of around three years.By passing the principal payments on the bullet notes to the A2 note-holders, NAB was able to achieve a weighted average life of three years on those