The number of older borrowers taking out longer loan terms has increased by 156% in the past five years, Quilter reveals.
Analyzing data from New Freedom of Information, Quilter found that in the first nine months of 2024, 22,103 mortgages with terms of 35 years or longer were sold to people over the age of 36.
This is the highest since 2018, when the figure reached 15,307.
Quilter mortgage expert Karen Noye says this “highlights growing concerns about housing affordability, rising interest rates and changing socio-economic trends”.
Data shows that just over 5,900 such mortgages were issued in 2020. Noye argues that this “paints a striking picture of how financial pressures are reshaping homeownership.”
However, anyone who takes out a mortgage for 35 years or longer from the age of 36 will be at least 71 years old when fully repaid.
Quilter suggests there is a risk that their monthly repayments could negatively impact their quality of life in retirement.
Assuming someone aged 36 takes out a £250,000 mortgage with a 35-year term at an interest rate equivalent to the current Bank of England base rate of 4.75%, Quilter notes that she would have a monthly repayment of £1,145 can expect.
Noye added: “The continued rise in property prices has made it increasingly difficult for buyers, especially those entering the market later in life, to afford homes without significantly extending the repayment period.”
“At the same time, higher interest rates have increased monthly payments, causing many borrowers to extend their mortgage loans to 35 years in an effort to reduce these costs.”
“In addition, demographic and societal shifts mean that many people are buying their first home much later in life. The average age of first-time homebuyers has risen steadily, reflecting the challenges of building savings in an expensive living environment. For older buyers, longer terms help alleviate affordability constraints, but also come with significant trade-offs.”
“The consequences of this shift are far-reaching, especially as more and more people approach retirement age and still need to pay off their mortgage debt.”
“Retirees on fixed incomes may find it challenging to manage mortgage payments on top of other living expenses, especially if they have not factored this into their retirement planning.”
“Additionally, longer mortgage terms mean borrowers pay significantly more interest over the life of the loan, increasing the overall cost of homeownership. For many, this could impact their ability to save for retirement or achieve other long-term financial goals.”
“The data also raises questions about how this will impact broader economic trends. A generation entering retirement with outstanding mortgage debt could put additional pressure on state support systems and on the housing market itself, as some may be forced to downsize or sell their properties to finance their later years.”
“Although there are several risks to consider, a longer mortgage term does not always mean bad news. Certain types of mortgage products allow you to overpay, which can make repayments more manageable after retirement age. Overpaying can also help reduce the amount of interest paid by shortening the overall term.”
“If you are considering taking out a mortgage for 35 years or more, it is important to seek professional financial advice wherever possible.”
“A financial planner can help you find the best mortgage product for your circumstances and keep an eye on your finances so you have the flexibility to overpay if you wish. At the same time, they can help you plan for a comfortable retirement, with the financial resources available to pay your mortgage repayments.”