Later life mortgage lending falls, but still casts a shadow over retirement

New figures from UK Finance show a drop off in later life mortgage lending in recent months.

There were 28,840 new loans advanced to borrowers aged over 55 in Q1 2024 - this is down 11.7% year on year.

The value of this lending was £4.3 billion and this was also down - by some 8.5%.

Some £2.26 billion of this lending was given to borrowers aged between 55 and 60 which is down 9.24% on the previous year. Some £440m of new lending was to borrowers aged over 70.

Helen Morrissey, head of retirement analysis at business consultancy Hargreaves Lansdown, says:“Later life mortgage lending is falling but still casts a significant shadow over our retirement planning. Having to find the money to pay housing costs in retirement can put further pressure on a budget that may already be under severe strain.

“Some of this lending will be for buy to let mortgages and so these costs in theory should be covered by tenants. However, it’s worth saying the rental market is under severe strain right now, with landlords increasingly opting to walk away as costs mount. Difficulties finding tenants could also leave retired landlords with a big gap in their income that needs to be filled at short notice.

“Lifetime mortgages accounted for £410m of new lending over the period. This is down over 30% from the same period last year. It shows equity release is still playing a real part in people’s retirement plans though we don’t know whether this is being done to fund things like home renovations or people are using it to boost their income.

“But the overwhelming volume of new lending comes from residential lending – so house purchases and remortgaging. Of course, some retirees will repay their mortgages relatively quickly post-retirement, but these figures show over £440m comes from borrowers aged over the age of 70.

“There’s every sign that as time goes on, this problem is going to mushroom, because those getting onto the property ladder in their 30s now are taking even longer mortgages. Some will be able to work later and use the extra cash to meet these outgoings, some will have windfalls during their working life to help pay off lump sums, but others face difficult retirement spending choices in an effort to make ends meet.”