Equifax data has found that 41% of live mortgages in the UK are held by customers who will be beyond retirement age (66+) at maturity (1). Over a quarter of these are held by those who will be over 70 at maturity.

Of the identified group of UK mortgage borrowers whose loans will not mature until they are past 66, 40% of them are already aged 55 or over, and 16% are 55+ and have a remaining mortgage balance over £100,000. Further, nearly half as many borrowers are 55+ and have contractual monthly repayments over £1,000.

Rising interest rates, paired with other inflationary pressures, have created an unsustainable situation for many mortgage borrowers of all ages. With UK interest rates climbing to a 15-year high of 5.25%, average monthly mortgage repayments have seen a 15% year-on-year increase. The number of mortgages with monthly repayments over £1,000 has also seen a 28% year-on-year increase.

A solution many have sought is extending their loan terms or delaying mortgage maturity, so they can have more time to complete their repayments. However, this may mean more borrowers carry an unexpected mortgage debt with them into their retirement years.

Meanwhile, older customers (2) who are already close to retiring may find themselves unable to get further extensions from lenders, and instead face increased monthly repayments alongside other heightened expenses like food and utilities. For consumers borrowing into retirement age, the average outstanding mortgage balance for those over 55 is £116,261 (3), with the average monthly repayment for this group sitting at £680 (4). On top of that, the average pension pot for over 55s across the UK is only £107,300 (5) showing that most UK pensioners already don’t have sufficient savings to enjoy a comfortable retirement, and the prospect of high outstanding mortgage repayments will be a further burden.

While several large lenders in the UK have started cutting mortgage rates in recent weeks due to intensified home loan market competition, borrowers continue to face never-before-seen costs. People of different ages are faced with varying options to manage this.

“Despite inflationary pressures slowing down and early signs of rate cuts among lenders, the high interest rate environment means there are still tough times ahead for mortgage borrowers.  Faced with higher monthly repayments, many borrowers are extending their loan terms for years into the future, hoping to spread out costs to ease the financial burden”, said Paul Heywood, Chief Data and Analytics Officer at Equifax UK.

“However, this is not available to all customers equally. Customers nearing retirement age are one of the toughest-hit groups, with many set to still be repaying their mortgages well beyond retirement age. Some members of this older demographic are unable to extend their terms further, meaning they are faced with more expensive monthly repayments. Customers facing this dilemma should reach out to lenders to explore what options are available to them, which may include potentially downsizing to remove a significant financial outlay”, Paul continued.

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NOTES TO EDITORS

1: Equifax mortgage data through June 2023.

2: This is to be understood as referring to mortgage borrowers aged 55 or over.

3: Equifax mortgage data through June 2023.

4: Equifax mortgage data through June 2023.

5: ONS data, sources: https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/datasets/pensionwealthwealthingreatbritain https://www.nutsaboutmoney.com/pensions/average-pension-pot-uk