Mortgage debt for over-65s set to double by 2030: report
Higher prices and a squeeze on earnings are changing the traditional time frame for homeowners to pay off their mortgages.
By John-Paul Ford Rojas, Business Reporter
The level of mortgage debt held by over-65s is expected to double to nearly £40bn by 2030 according to a new report.
It finds that rising house prices, tighter credit conditions and low real wage growth will mean more homeowners having the period of their home loans extend beyond the traditional retirement age.
The study from the International Longevity Centre-UK, backed by the Building Societies Association, forecast the level of mortgage debt held by this group rising from £20.1bn now to £39.9bn.
It said there was a trend away from the traditional route of people buying their first homes in their 20s and 30s, before moving up the mortgage ladder and paying off their debt in their 50s and 60s.
The research showed home ownership among those in their 20s and 30s had been falling and that 6%, or 1.42 million, of those now aged 35 to 64 will not now have paid off their mortgage before 65 given the current term of their loans.
"If nothing changes, it will become more common for consumers to buy for the first time in their late 30s or 40s, with longer mortgage terms from the outset," the report said.
"They will be more likely to trade up later in life and repay at least part of the mortgage from retirement income or draw more to fund needs in later life."
The shift in the housing market is part of a wider cultural change as people live and work for longer, the report said, with some people having a greater capacity to borrow into their older age.
Building societies are already seeing a rise in mortgages for older customers.
During 2016, the proportion of new mortgages from the sector with a term beyond age 65 rose from 34% to 38%.
The study projected future mortgage debt figures using data on current and historic home ownership, net housing wealth for homeowners and mortgage debt by age.