Mortgage debt held by over-65s to double by 2030, report predicts
3 May 2017
Mortgage borrowing into older age is likely to move from niche to mainstream within the next decade, a report predicts.
The amount of mortgage debt held by over-65s is set to double by 2030, increasing by more than £19 billion from £20.1 billion to £39.9 billion, according to projections in a study by the International Longevity Centre-UK (ILC-UK), supported by the Building Societies Association (BSA).
Rising house prices, tighter credit conditions and low real wage growth mean there could be a significant shift in the customer base of the mortgage market over the next 13 years, the report finds.
This is a move away from traditional ideas about home ownership, where someone would have bought their first home aged in their 20s, tradied up in their 30s and 40s, paid off their debt in their 50s and 60s and entered their older age mortgage-free.
The report said there could be a growing trend for consumers to buy for the first time in their late 30s or 40s, with longer mortgage terms from the outset.
They will be more likely to trade up later in life and repay at least part of their mortgage using their retirement income or draw more to fund needs in later life.
This shift in the housing market is also 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%.
Paul Broadhead, head of mortgage policy at the BSA said the industry would need to reflect the changing needs of customers.
He said: “This will include an increasingly intergenerational approach to home ownership, as parents and grandparents borrow to release some of their housing wealth to support the younger generation.
“It is the combination of multiple factors that will drive greater levels of mortgage borrowing in later life.”
Joe Giddens/PA Wire