Young borrowers increasingly expect to be paying their mortgage into retirement as they stretch themselves to get on the housing ladder.
Around half of 25-34 year olds say they may need a mortgage that lasts beyond state pension age, according to a new survey by the Building Societies Association (BSA).
And more than one in four fear they may struggle because their credit history, income level or age will count against them.
Paul Broadhead, head of mortgage policy at the BSA, said: “We are all now living much longer and getting on to the property ladder later in life.
“Many younger buyers are realising that they may not be able to pay off their mortgage until after they retire.
“As the average age of a first-time buyer increases, borrowing into retirement is becoming the ‘new normal’, rather than a niche form of lending."
Broadhead said borrowers now have to contend with strict affordability assessments and must therefore borrow over a longer term to secure a mortgage, following the Mortgage Market Review.
“These demographic and regulatory changes mean some borrowers may find their mortgage application is rejected if they need to borrow into their anticipated retirement.”
He said the mortgage market needed 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.
“Some societies do not have upper age limits, tend to take the case-by-case approach to applications and are keen on developing long-term products that cater to first-time buyers who may want or need to borrow into older age.
“The sector is also keen to debunk the myth that once you are over 40 you are ‘too old to get a mortgage’.
“Given that the population is ageing 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.”