The amount of mortgage debt held by over 65s is set to increase by more than £19 billion by 2030, from £20.1 billion to £39.9 billion, according to a new study by ILC-UK and the Building Societies Association.
The report shows that current economic trends such as house price inflation, tighter credit conditions and low real wage growth will cause a significant shift in the customer base of the mortgage market over the next 13 years.
Since the financial crisis, home ownership amongst 20-29 year olds has fallen from 53% to 38%, and from 73% to 65% for those between 30-39 years old.
Today, many first-time buyers are delayed from stepping onto the property ladder by factors including low supply of new homes and higher house prices, greater student debt, persistent low real income growth and challenges in saving for a deposit.
As people get onto the property ladder later in life, ILC-UK research has shown that 1.42 million people aged 35 to 64 will not have paid off their mortgage before retirement given the current term of their loan.
This means that 54% of mortgagees will still have over £10,000 left to pay at retirement, according to new more 2 life research.
Over half of 35-54 year olds and nearly three in ten (28%) 18-34 year olds surveyed expect to owe more than £10,000 upon entering retirement.
The industry must respond to reflect the changing needs of customers. 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.
If you are concerned about your existing mortgage, please call Vicky, Caroline or Lyn at Poole Townsend who can help. Initial appointments are at our expense so you have nothing to lose.