Mortgages that last forever are feared as rates climb.
According to data from Hargreaves Landsdown, more than one in six respondents anticipate becoming 65 by the time they complete paying off their mortgage.
According to a survey conducted by the finance broker, 17% of respondents anticipate being older than the typical retirement age by the time they have paid off their mortgages, while 9% anticipate being older than 70.
The report comes after the government and lenders advised house loan extensions for borrowers who worry they may have trouble making their payments. This was in response to last week’s increase in interest rates of 50 basis points to 5%, the 13th straight increase, which brought the rate to its highest level in 15 years.
According to a study by a financial services company, the average age at which people expect to have paid off their mortgage has increased from just a year earlier by three years to 60.
In addition, among those asked who were over 55 and still had a mortgage, 18% said they anticipated paying it off once they turned 70, while 7% said they would never be able to.
Among retirees, 80% enjoyed mortgage-free ownership of their homes, while 6% still did.
“Higher mortgage rates are likely to mean even more people paying their mortgage later in life,” says Sarah Coles, head of personal finance at Hargreaves Lansdown.
“According to Moneyfacts, it has increased the average two-year fixed rate arrangement to about 6.2%, giving remortgaging nightmares to hundreds of thousands of homeowners.
“As a result, lenders and the government have decided to make it simpler to temporarily extend the mortgage’s term without doing affordability checks.
“It is intended to make quick adjustments to mortgages easier, but there’s a good probability that those who take advantage could wind up with a more substantial change to lower their monthly payments.
“The issue is not just being caused by higher mortgage rates,” continues Coles. Much of the responsibility rests with the expense of real estate. Building a deposit takes much longer given that the average price of a home is £286,000, especially since we have to save while paying exorbitant prices for everything from rent and bills to groceries. It indicates that the typical age of a first-time buyer has reached 30.
“Because FTBs are borrowing at such high multiples of their income, payback terms are being extended.
According to the English Housing Survey conducted in 2021/22, 56% of FTBs with mortgages had a 30-year payback duration.
“And even those who purchase relatively young and with a shorter mortgage can encounter a variety of difficulties along the way, delaying the repayment of their mortgage.
Even if you purchase a home at the average age of 30 and take out a 25-year mortgage, a single setback in your personal life could cause your payments to continue into your 60s.
The poll for Hargreaves Landsdown was done by the research company Opinium, which reached out to 2,000 people in May.