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As more people continue their working lives past pension age, the number who are now taking out mortgages in later life has seen a sharp increase.
The last three months of 2024 saw 35,840 new loans granted to the over 55s. This is a rise of 28.2% over the same period in the previous year. The figures from UK Finance confirmed the total value of this lending at £5.6 billion, an increase of 38.6% when compared to the same period in 2023.
People are working longer
A key reason why so many more people are taking out loans in their later life can be traced to the cost of living. Many people work to a later age than in the past because they still need to support their families. At the same time, increasing living costs have made it harder for them to pay off their mortgages as early as their parents might have done.
The result is that men are now typically retiring at 65 and eight months, while women are ending their working lives at 66 and six months.
Comfortable with borrowing
Another factor is a change in attitude to debt. Compared to previous generations, more older people are now more comfortable with borrowing.
UK Finance Head of Analytics, James Tatch, said: “After a decline in later life lending in 2023, a recovery was seen throughout 2024 as rates started to fall and inflation eased.
“The number of loans to older borrowers increased significantly. This growth reflects the recovery seen across the wider market.”
Withdrawing equity is popular
Remortgaging to free up funds is another big reason for the growth in later life lending, with more people choosing to withdraw equity from their property. Others are relocating to different regions, potentially to be closer to relatives. Meeting people’s changing circumstances is a driver for later life mortgages, as James Tatch confirms:
“As more individuals move towards and enter retirement, there is a growing demand for financial products tailored to their needs. The industry is working hard to adapt to these changing demographics, offering solutions that help customers manage their finances effectively during this life stage.”
What later life mortgages are available?
Products people over age 55 are increasingly turning include lifetime mortgages which are a type of equity release that lets you borrow money against the value of your home, and retirement only mortgages which are interest-only.