Millennials prioritise mortgage over pension by three to one

Millennials prioritise mortgage over pension by three to one

People under the age of 35 favour saving for a mortgage over their retirement by a ratio of three to one, research commissioned by the Nottingham Building Society has revealed.

The survey of 1,065 adults found 24 per cent of under-35s considered saving for a mortgage their top priority.

By comparison, just 8 per cent considered saving for their retirement.

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The survey, carried out by Consumer Intelligence, also found that 34 per cent of under-35s were saving for a house – almost twice the overall percentage across all age groups of 18 per cent.

It also revealed that, of those cutting back on pension contributions, one in three were saving to buy a property. It found around 22 per cent of those questioned said they cut pension saving in the past two years to boost other savings.

Ian Gibbons, senior mortgage broking manager at Nottingham Mortgage Services, said the results demonstrated there would be “strong demand” for the Lifetime Isa –  an incentivised savings vehicle for first homebuyers, which can also be used for retirement.

But he warned this posed a threat to retirement savings.

“The government is providing a wide range of help for savers trying to raise the money for deposits for houses. with Help to Buy ISAs and Lifetime ISAs among the deals on offer,” he said.

“Savings can clearly only go so far but there is a potential risk in cutting back on pension saving and missing out in later life. Potential homebuyers should explore their options for borrowing as there are mortgages available for those with small deposits and a broker who can search the market will help.”

But the research also found that 14 per cent of respondents could not afford to save for either a first home or a pension.

The Lifetime Isa will allow people under 40 to start saving up to £4,000 a year, plus a 25 per cent government bonus towards either a first home or their retirement.

The government released further details of the product last week. The Lifetime Isa is due to be launched in April 2017.