Pensioners burdened with debt

Published on Friday 22 May 2009 19:19

PENSIONERS are burdened with increasingly alarming levels of debt well into their retirement years, new figures have suggested.

Analysis of over-65s who have used equity release plans to unlock the money tied up in their home over the past year found that one in three still had an outstanding mortgage, owing an average of 43,069.

The study, by equity release specialist Key Retirement Solutions (KRS), also found that one in five pensioners has credit card debts, at an average of almost 9,000 and a fifth have outstanding loan payments.

In all, more than 55 per cent of over-65s in the UK have outstanding debts, the group claimed, with the overall debt burden equating to 183 billion. Customers aged between 65 and 69 have an average debt of 29,053, said KRS, while those aged over 70 still owe more than 35,000.

Chris Tapp, director of charity Credit Action, said pensioners were no exception to the personal debt trend of the past decade. "For those pensioners now burdened with high levels of debt – and this research shows that such people are distressingly numerous – the reality of living with such financial baggage is often a hugely stressful experience, at the very time of life when one would hope such concerns would be a thing of the past."

However, pensioners in Scotland still have a total 41.8bn tied up in their homes, according to figures given to The Scotsman by Prudential.

House price falls over the past 12 months have knocked 6.6 per cent from the value of homes owned by over-65s in Scotland, the insurer estimated, compared with pensioner house price falls of 10.2 per cent in England and Wales.

Keith Haggart, director of lifetime mortgages at Prudential, said: "Even in the current market, the vast majority of retired homeowners who have paid off their mortgage and owned their home for some time still have considerable wealth tied up in their properties."