The economic market climate is predicted to cause a rise in pensioner mortgage debt.
Research from ILC-UK and the Building Societies Association has revealed that by 2030, UK pensioners will see their mortgage debt grow to £39.9 billion, with factors such as tighter credit conditions and house price inflation leading to a change in the typical type of mortgage customer.
The shift in consumer base initially started to emerge following the financial crisis, as rates of homeownership fell for those aged between 20 and 29 – from 53% to 38%. There has also been a decline in rates for those between the ages of 30 and 39, which has dropped from 73% to 65%.
There are also many obstacles for first-time buyers to contend with at present, meaning their ascent onto the property ladder is being delayed. Rising house prices, reduced wage growth and the task of saving for a deposit are all challenges which prospective home buyers must face.
Factors such as these mean people are stepping onto the property ladder at a later stage in life, with the research indicating that, given the current term of their loans, around 6% of those aged between 35 to 64 will not have paid off their mortgage prior to retirement.
Commenting on the figures was Paul Broadhead. The Head of Mortgage Policy at BSA highlighted the need to acknowledge how the market has changed and the importance of adapting to it.
“The first question for national policy-makers, including government, is whether action should be taken to try and maintain the ‘traditional’ market. In my view, the socio-economic changes lenders and consumers are already experiencing are unstoppable. So instead the focus must be on adapting to a changing market. Top priority must be given to radically increasing housing supply across all tenures, including recognising shared ownership as a tenure in its own right.
“We must also respond as an industry 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.”
