1 in 3 young people expect to pay mortgage beyond age 60
Delays in getting onto the housing ladder are leading to increasing worries about retirement for many young people, according to research from Halifax.
One in three (34%) expect to work beyond retirement age to pay off their mortgage, while nearly half are worried that they won’t be able to afford their mortgage payments in retirement.
And the majority (51%) are concerned that paying their mortgage will hamper their ability to actually save for retirement.
But these worries are not enough to put the younger generation off owning a home altogether. The report reveals that homeownership aspirations remain strong, backed up by the fact that numbers of first-time buyers have recovered strongly in recent years. A whopping 300,000 took their first step onto the property ladder in 2015, with an average age of 30.4 years.
Making it affordable
Buying with a partner is the most likely measure a would-be first-time buyer is willing to consider to make owning a home more affordable, with half saying they would be prepared to do this. Extending their mortgage term beyond 25 years is the second most likely measure (34%).
In 2007 the proportion of first-time buyers taking up a 35-year mortgage stood at 16%, but this had grown to more than one-in-four (26%) by last year. Over the same period, the share of mortgages with a 20 to 25-year term dropped from 48% to 30%.
Against this backdrop, it’s unsurprising that one in three young people don’t expect to pay off their mortgage until after their 60th birthday – more than one in 20 (6%) still expect to be paying their mortgage over the age of 70.
Craig McKinlay, mortgages director at Halifax, said: “Despite the barriers and the understandable concerns, it’s very positive to see that younger generations are still striving to get onto the housing ladder, with more than 300,000 taking that first step in 2015.
“Although many of those late to the ladder will inevitably still be paying their mortgages later into life, they are increasingly taking a range of measures to ease the burden.
“Borrowers should be cautious when looking to extend their mortgage beyond 25 years. This will not only increase the overall cost of the mortgage, but could have a potential knock on impact on their quality of life in retirement.”