Once upon a time, Britons hoped to be rid of their mortgages sometime in their fifties, ahead of a smooth path to retirement. That increasingly looks like a fantasy.
A freedom of information request by former pensions minister Steve Webb has revealed that an increasing number of young people are going to be worrying about making repayments into their dotage.
Webb, now a partner with pension consultant Lane Clark & Peacock, sought to track the proportion of new mortgages beyond the state retirement age, currently 66, in the wake of the recent publication of the Bank of England’s financial policy report. It showed that 42 per cent of new mortgages in the final three months of 2023 were like this. Webb’s FOI found that compares to less than a third (31 per cent) in the fourth quarter of 2021.
He also found that there were nearly 300,000 home loans of this type advanced in the final quarters of 2021, 2022, and 2023 combined. Given where the housing market is after 14 consecutive interest rate rises, it is quite possible that this sort of loan will become the rule not the exception in the near future.
It isn’t only first-time buyers who are affected. Many existing property owners have extended the terms of their loans to cope with the sharp rise in bills they faced when cheap fixed-rate mortgage deals, taken out during the time of rock bottom interest rates, expired.
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