We are seeing a transition in the demographic of those utilising the mortgage market. The economy has seen significant change over recent years and according to research by the International Longevity Centre and the Building Society’s Association it appears that borrowing has become far more common for those over 65. The research outlines the fact that now many of those over the age of 65 will be in increasing debt, the figures indicate that by 2030 their debt will rise by more than £19 billion.
Changes to housing market dynamics are being led by low real wage growth; low supply of new homes; price inflation and rising student debt. Last year the amount of new mortgages taken out by over 65’s rose from 34% to 38%, and is expected to keep rising over the coming years. The mortgage market is seeing an evolution from the traditional way people used to buy their homes in their 20’s, trading up in their 30’s and paying off debt in their older age to be able to live their later life with no mortgage debt. Now, home ownership for younger brits has plummeted from 53% to 38% and for those between 30 and 39-years-old home ownership has fallen from 73% to 65%.
Figures show that over 1.42 million people aged 35-to- 64 will not have paid off their mortgage before retirement. It looks likely that the majority of the population will not be buying their 1st home until they are 35 to 45 years old, with longer mortgage terms from the get-go. The report predicts that by 2030, 58% (£3.3 trillion) of all housing wealth in the UK will be owned by our over 65’s.
“The question being asked to our government is whether action needs to be taken to try and maintain the way the traditional market runs, and to increase housing supply across all tenures including recognising shared ownership as a tenure in its own right, and respond as an industry to reflect the changing needs of customers.” – Paul Broadhead, Head of Mortgage Policy at the BSA.
The report states that with life expectancy being longer and retirement age being later, there will be greater capacity for people to borrow in their older age.