It has typically been the policy of most major lenders to issue mortgages only to those able to repay the balance in full prior to their retirement. As of late, lenders have been acknowledging the UK’s skyrocketing average life expectancy, along with the desire of more people than ever before to work well into their 60s or 70s.
Consequently, more than half of all new mortgages issued are being allocated to borrowers who will still be repaying their debts after their 65th birthdays. That’s according to new figures from UK Finance, which indicate that 52% of new homeowner mortgage lending activity involves borrowers planning to continue repaying long after turning 65.
The UK’s ageing population is spurring an inevitable shift in attitudes towards mortgage lending, reports UK Finance.
Growing demand from older applicants
The report from UK Finance indicates that this is the first time more than half of all new mortgages issued are going to those who will still be repaying their home loans after their 65th birthday. Demand for mortgages among applicants aged 55 and over has been growing significantly for several years.
In 2014, less than one-third of all mortgages issued went to applicants who would complete their repayment obligations beyond the age of 65.
Speaking on behalf of UK Finance, director of mortgages Charles Roe said that the trend was only likely to continue gaining momentum indefinitely.
“There’s been growing demand for mortgages from those aged over 55, and this is set to continue as more people live and work for longer,” he said.
“For the first time since records began, more than half of all new mortgages are due to end after the homeowner’s 65th birthday, and lending to over-55s has grown even where mortgage lending in the wider market has remained subdued.”
“Later life lending, both now and in the future, will be imperative as existing homeowners look to later life products for accessing equity as they get older.”
Equity release products have also seen unprecedented demand from homeowners across the UK. However, decisions regarding equity release should only be reached after enlisting the support of an experienced broker or financial adviser.
While attitudes towards finance in later life are changing, the potential consequences associated with secured borrowing must always be carefully considered.
“UK Finance’s findings underscore the integral role that later life lending plays in consumers’ long-term security,” commented the chief executive of the Equity Release Council, Jim Boyd.
“Attitudes towards home finance in later life have changed, and homeowners are increasingly comfortable with mortgage borrowing into retirement and open to the benefits of realising some of their property wealth as they age.”
“Property wealth can play an important part in a holistic approach to funding retirement, and, as an industry, we must work together to ensure consumers get the information they need to weigh up increasingly complex financial decisions to do this.”