Mortgage crisis: One in six will still be paying for their home after 65
Almost one in ten expect to be over the age of 70, or never to pay their home loan off, the research from investment platform Hargreaves Lansdown (HL) suggests. The survey of 2,000 people conducted by Opinium found that 17 per cent expect to be over the age of 65 by the time they repay their mortgage.
Among those who were aged 55 and over and still had a mortgage, about one in five expected to repay over the age of 70 (18 per cent), and 7 per cent said they would never be able to repay their mortgage. The average age that people expect to repay their mortgage is 60 – up from 57 a year earlier. Of those who were already retired, 80 per cent owned outright and 6 per cent still had a mortgage.
The survey comes after Rishi Sunak urged cash-strapped Britons to “hold our nerve” with interest rate hikes as he claimed “there is no alternative” to stamping out inflation. The Prime Minister said “inflation is the enemy” as he defended the Bank of England’s decision to raise interest rates to a 15-year high of 5 per cent last week, piling pressure on mortgage-holders. Hargreaves Lansdown said “runaway” mortgage rates were likely to force more people to extend the period of their mortgage later in life.
Sarah Coles, the firm’s head of personal finance, said: “One in six people will still be paying the mortgage after the age of 65, and recent hikes in mortgage rates could force more of them to extend the loan later into their 60s, with horrible implications for their finances. Higher mortgage rates are likely to mean even more people paying their mortgage later in life. It has pushed the average two-year fixed rate deal to around 6.2 per cent, according to Moneyfacts, causing a re-mortgaging nightmare for hundreds of thousands of people. As a result, lenders have agreed with the government to make it easier to temporarily extend the term of the mortgage, without affordability checks.
“It’s not just higher mortgage rates causing the problem,” she added. “The cost of property shoulders much of the blame. With the average cost of a home now at £286,000, building a deposit takes far longer – especially because we’re having to save while paying through the nose for everything from bills and rent to food.”
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “If you plan to keep working past retirement age to pay your mortgage, you need to appreciate that you may not be in control of when you stop work. The number of people who are too sick to work has hit a record high, and is far more common in older workers. If you need to keep working to cover the mortgage, you could end up with a serious shortfall.”
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