Mortgage blog: One in 20 over-65 households still paying a mortgage

Posted 30 April 2014

Will you have repaid your mortgage by the time you retire? If there is a chance that you won't, you're not alone - at least according to official statistics. New data shows that there are more than 320,000 people over the age of 65 currently paying a mortgage in the UK, a figure that has risen by a fifth in the past two years.

One in 20 of all over-65 households now have a mortgage. New figures show that in 2012/13 there were a total of 326,000 families where the head of the household is over 65 and still paying a mortgage. The number has risen by 57,000 since 2010, an increase of more than 20%.

The Daily Mail reports that "‘a combination of soaring house prices, lower wages and poor pensions returns mean more and more people who would hope to have cleared their debts before retiring are still paying off a mortgage".

Pensions minister Steve Webb said: "According to the latest English Housing Survey there are approximately 6m households in England, where the household reference person is aged 65 or over. Of these, around 326,000 are owner occupiers who are buying their home with a mortgage. Based on these figures, the Department estimates that approximately 5% of pensioner households are likely to be paying a mortgage."

Ros Altmann, a former government pensions adviser, said: "It is certainly a concern to see an increase in the number of pensioners still paying off their mortgages. This could well be the result of pension funds not providing enough money in retirement or endowment mortgages that have fallen short of expectations, leaving pensioners struggling to repay their debts.

"The financial crisis has hit many people's pensions and disappointing market returns have left endowment policies with large shortfalls."

First-time buyers taking longer-term mortgages

At the same time as more and more older people have to maintain a home loan, the number of under-35s buying with a mortgage fell from 1.38m in 2010/11 to 1.27m last year.

This is partly due to rising prices as demand for the government's Help to Buy scheme has outstripped the supply of properties.

In January 2014, prices for those buying their first home were up 7.6%, compared with 6.5% for owner-occupiers, according to the Office for National Statistics.

Keith Osborne, editor of Whathouse.co.uk, says: "First-time buyers are struggling to get onto the property ladder meaning that they don't start repaying their mortgage until later in life. As house prices increase, many first-time buyers have to take their home loan over a longer term - perhaps 30 or 35 years - in order that they can afford the repayments. It follows therefore that they will be older when the mortgage is finally repaid."

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