Youngsters face mortgage debt into retirement
Research by the Building Societies Association (BSA) found that half of people in that age group would need to borrow past the age of 65.
More than a quarter of respondents (27%) also worried about their mortgage prospects. They believe that getting a mortgage into retirement may be difficult because of their credit history, income level or age.
The BSA said people were living much longer and were unable to afford a property until later in life. This would have wide ranging impacts for the property market and mortgages into retirement would become the norm.
Paul Broadhead, head of mortgage policy at the BSA, said the market would need to adapt to meet the needs of these buyers.
“The Mortgage Market Review, introduced just over a year ago, has had an impact on borrowing,” he said.
“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.
“These demographic and regulatory changes mean some borrowers may find their mortgage application is rejected if they need to borrow into their anticipated retirement. The mortgage market needs to change to cater for this shift in borrowing.
“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.
“Given that the population is aging and house purchase later in life is more common, the Government, regulators and the financial services sector needs to cater for this change. Paying off a mortgage by the age of 65 is no longer a reality for many.”