Half of young borrowers will need a mortgage lasting into retirement
The Building Societies Association revealed in a new survey more than half of young borrowers expect they will be saddled with mortgage debts into their retirement. 52% of 24-34 year olds believe they may need a mortgage that lasts into retirement.
Over a quarter (27%) of people in this age group also think they may struggle getting a mortgage into retirement because their credit history, income level or age will count against them.
Paul Broadhead, head of mortgage policy at the BSA, says: “We are all now living much longer and getting on to the property ladder later in life. Many younger buyers are realising that they may not be able to pay off their mortgage until after they retire. As the average age of a first-time buyer increases, borrowing into retirement is becoming the ‘new normal’, rather than a niche form of lending.
With the introduction of the Mortgage Market Review just over a year ago, which has had an impact on borrowing. The application process is much more rigorous and borrowers now have to contend with strict affordability assessments that factor in other commitments. This means they may have to borrow over a longer term to secure a mortgage.
Broadhead adds: “Despite the concern shown by younger homebuyers, it isn’t all doom and gloom. The building society sector tends to be more flexible and willing to offer mortgages that extend into retirement. Some societies do not have upper age limits, tend to take the case-by-case approach to applications and are keen on developing long-term products that cater to first-time buyers who may want or need to borrow into older age. The sector is also keen to debunk the myth that once you are over 40 you are ‘too old to get a mortgage’.
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