Mortgage volumes plummet for older borrowers

There were 29,060 new mortgages taken out by older borrowers over 55 in the last three months of 2023 - down 37.1 per cent in a year.

Some 13,160 of these borrowers were in work, and 1,000 retired. The number of retired people with mortgages is down 30.56 per cent in a year.

Around half of new mortgages for the over 55s were for house purchases or remortgages (14,625) – down 20.95 per cent in a year.

And 6,710 of them were new lifetime mortgages (equity release) – down 40.14 per cent.

There were 255 retirement interest-only mortgages – down 43.3 per cent in a year - and 7,980 were buy-to-let loans or remortgages, down 52.86 per cent.

Residential later life loans make up 7.38 per cent of residential loans and buy to let later life loans 21.98 per cent of all buy to let loans.

These figures are all from UK Finance and 

Sarah Coles, head of personal finance, Hargreaves Lansdown, says: “Older borrowers are ditching mortgages by the bucket-load, thanks to higher interest rates. 

“Hundreds of people are focusing intently on repaying the debt before they put their feet up, thousands are delaying equity release, and the number of older landlords snapping up new buy-to-let loans has more than halved.

“Higher house prices and more complicated personal lives have been driving more people to pay their mortgage later in life. It means that, all things being equal, we'd expect the numbers of retirees still paying the mortgage to be rising. 

“Clearly, sky high mortgage rates have turned the tables, and persuaded people to double down on their efforts to repay their debts before retirement – to avoid entering their golden years weighed down by huge monthly repayments. The number of retired people with new mortgages is down almost a third in a year.

“If people are repaying their mortgage alongside making generous pension contributions, there isn’t anything wrong with this. The concern is that some will have compromised on pensions, stocks and shares ISAs and savings in order to maximise mortgage repayments.

“Later in your working life, when children have often left home, has typically been a time when people have been able to prioritise putting money aside for the future, so missing this opportunity could have a profound impact on their financial resilience in later life.

“Equity release is also off the table for thousands of people. The rising cost of these loans means people need to either pay more interest each month or see more of it roll up, and devour the equity in their home. Thousands will be delaying equity release until cheaper deals emerge, but they risk struggling on low incomes in the interim – especially after two years of rapidly rising prices when food and drink prices alone have shot up by 25 per cent.

“New buy-to-let mortgages have fallen off a cliff among older landlords, with the number of these loans halving in a year. Given that older people make up more than a fifth of all buy-to-let loans, this has a wider effect on the broader market.

“As more older people decide that being a private landlord isn’t as rewarding or as tax-efficient as they had hoped, it means they’re selling up, which puts more pressure on rising rents again.

“The more positive news is that the pressure has been easing since these figures were released, and lower mortgage rates will have taken less of a toll in recent months. However, falling mortgage rates have stalled more recently, as the market digests the fact that inflation is more stubborn than they expected. It means we can’t rely on swift rate cuts to get us out of trouble financially in retirement.”