More than a million mortgages that stretch beyond the borrower’s state pension age have been arranged in the last three years, figures show. The data, obtained via a freedom of information (FoI) request by the former Lib Dem pensions minister Steve Webb, show the proportion of home loans arranged to last into retirement increased from 31 per cent to 42 per cent.
In a speech to the Building Societies Association (BSA) last week, Emily Shepperd, FCA chief operating officer said: “Alongside longer terms we also see a greater proportion of mortgages projected to mature around state retirement age. The projected median age of a first-time buyer at maturity is now 65 years old, up from 56 in 2005.
“The proportion of mortgage customers over 67 is currently less than 2% of all loans. By 2040 this rises to 5%, and by 2050 it is almost 10%.” According to freedom of information (FOI) data supplied by the Bank of England, 42% of new mortgages in the fourth quarter of 2023 – or 91,394 – had terms going beyond the state pension age.
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Ms Shepperd went on and said: “Lending into retirement is moving from a niche to a norm.” She said that building societies recognise the need to consider different income and expenditure sources and needs, different lifestyle risks, different capacity to weather financial shocks.
She added: “With borrowers projected to hold debt for longer, now is the time to ask yourself about the products and services you will provide to those borrowers to meet their needs responsibly and help them meet their financial goals – what will you need to do to support this growing population of customers and deliver good outcomes?
“Getting this right will of course benefit those individual customers, enabling them to meet their housing needs in later life, and move if that is their aim. It may also support first-time buyers with an increase in the supply of homes.”