Pensioner mortgage debt to hit £40 billion

A new report has warned that UK pensioner mortgage debt will hit £40 billion by 2030 – double what it is now.

The study says soaring house prices, slow wage growth and crippling student loans will combine to force many people to borrow into retirement.

Ticking time bomb

Labour politician Wes Streeting said of the situation: “This is a ticking time bomb.  It’s a serious issue.

“The Government needs to take much more radical action to address the housing crisis, by building more homes than planned and providing more help for first time buyers’.


The survey was conducted by the International Longevity Centre and is supported by the Building Societies Association.

It claims more than 1.4 million people between the ages of 35 and 64 will be unable to pay off their mortgage by the time they retire and first time buyers are having to wait longer to step on the first rung of the housing ladder.


Research predicts that it will become more common for families to have to wait until their late thirties or early forties before being able to buy their own home as they struggle to get together enough money for a deposit.

Those that have mortgages may find themselves struggling to pay if off before they retire.  Most at risk are the 400,000 borrowers between 55 and 59 – 11.4% of the age group – who are set to borrow into retirement given the terms of their current loans.  The percentage falls to 5.4 for the 35 to 49 year olds – an estimated 240,000 people.


Loans with terms as long as 35 years have become increasingly popular in recent years as borrowers try to spread the cost of their loans.

The report comments: “Current economic trends such as house price inflation, tighter credit conditions and low real growth means we can expect to see a significant shift in the customer base over the next thirteen years.”


It claims the UK mortgage market is undergoing ‘a marked evolution from the traditional route’ by which first time buyers were in their twenties, traded up in their thirties and forties and arrived at older age with little or no mortgage debt.

Those who have already retired are generally able to afford their repayments, but there is a stark warning for those who may be forced to borrow into retirement in the future that they might not be ‘as financially comfortable.’


Paul Broadhead, head of mortgage policy at the Building Societies Association, says the changes in the market are ‘unstoppable’ and that ministers, lenders and consumers all need to adapt.

Former pensions minister Baroness Altmann says that too many lenders are adopting a ‘computer says no’ attitude to lending to older borrowers because they are worried they will fall into arrears in retirement.

Secure pension income

She said: “More people are likely to need to take out mortgages that last into their old age. If they have a secure pension income, there should not be too much of a problem.

‘Unfortunately, though, many of the banks are still refusing to lend to people if their mortgage would last into retirement. However, some building societies have changed their policy and are recognising that people can repay their mortgages even if they are no longer working.’