More than one in six people expect to be over the age of 65 by the time they repay their mortgage (17%). Almost one in ten expect to be over 70 – or never to pay it off (9%) according to new research conducted by Opinium for Hargreaves Lansdown.
Among those who were aged 55 and over and still had a mortgage, one in five expected to repay over the age of 70 (18%), and 7% said they’d never be able to repay their mortgage. The average age expected to repay the mortgage is 60 – up from 57 a year earlier. Of those who were already retired, 80% owned outright and 6% still had a mortgage.
Runaway mortgage rates are now predicted to force more people to extend the period of their mortgage later in life.
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown said “More than one in six people will still be paying the mortgage after the age of 65, and recent hikes in mortgage rates could force more of them to extend the loan later into their 60s, with horrible implications for their finances.”
“Higher mortgage rates are likely to mean even more people paying their mortgage later in life. It has pushed the average 2-year fixed rate deal to around 6.2%, according to Moneyfacts, causing a remortgaging nightmare for hundreds of thousands of people. As a result, lenders have agreed with the government to make it easier to temporarily extend the term of the mortgage, without affordability checks. It is designed to make short-term mortgage tweaks easier, but there’s every chance that people taking advantage may end up with a more permanent change, to make monthly payments affordable.”
“It’s not just higher mortgage rates causing the problem. The cost of property shoulders much of the blame. With the average cost of a home now at £286,000, building a deposit takes far longer – especially because we’re having to save while paying through the nose for everything from bills and rent to food. It means the average age of a first-time buyer has hit 30. The fact that first-time buyers are borrowing so many multiples of their income means repayments are stretched over a longer period too. The English Housing Survey in 2021/22 found that of those first-time buyers who had a mortgage, over half (56%) had a repayment period of 30 years. And even those who buy relatively young, with a shorter mortgage, can run into all kinds of trouble along the way, which pushes their mortgage repayment back. Even if you snap up a property at the average age of 30, and take out a 25-year mortgage, it only takes the odd life hiccup to push payments into your 60s. If you end up dipping into your property equity, or face divorce, you can push your final repayment date back beyond retirement.”