A study published this month by the International Longevity Centre-UK predicted the total mortgage debt among the over 65s will increase from £20.1bn to £39.9bn by the end of the next decade.
The trend marks a significant shift compared to previous generations’ habits, which saw people paying off debts in their 50s and 60s and entering older age with little or no mortgage debt.
Advisers frequently blamed interest-only mortgages for the high levels of debt, with many people who took out such products prior to 2012 failing to put in place a repayment strategy.
Kim Barrett, chartered financial planner at Barretts Financial Solutions in Hertfordshire, said: “I think it is a frightening reflection of the way society is going.
“Ever since (former prime minister) Margaret Thatcher removed controls on lending in the 1980s it has been the norm for people to fund their lifestyle with debt, and it is frightening to hear that personal debt is increasing as rates are so low.
“People get older and continue to consume and demand the things they wanted when they were younger. They still want to drive a flash car and try to fund their children a bit.”
Matthew Bird, financial planner at Cardiff-based Seer Green, added: “One of the primary reasons is all the interest-only mortgages that were taken out prior to the credit crisis. People are having to remortgage with longer terms, pushing them into older ages than if the option had not been available.”
He added that many people would be forced to work longer to pay down their debts, but such a strategy can come with risks attached, such as the possibility of health problems in later life.
"Lenders are a bit more wary now of lending past retirement age,” he continued. “It is a bit harder to get a mortgage past 65 unless you can show them proofs of a good pension.”
Downsizing and various forms of equity release are often touted as solutions to later-life debt – but advisers were keen to stress they are by no means the right solution for everyone.
Melinda Bush, adviser at Dartford-based Quartz Financial Services, said: “People were saying ‘when I retire I am going to downsize’, but it comes round really quickly and they don’t feel as old as they thought they would and don’t want to downsize.
“They might have grandchildren round the corner they don’t want to be away from.
"Equity release can be a solution in certain scenarios, but it is not for everyone. It is a bit more consumer-friendly than it was 20 years ago, but full advice should be sought."
Ms Bush pointed out that some lenders have increased their maximum borrowing ages to 80 - but that does not always fit in with people’s retirement income.
But not everyone is pessimistic about the situation, with Kent-based adviser Simon Webster, at Facts and Figures Financial Planners, calling for a more balanced attitude toward later-life mortgage debt.
“People are not retiring at 60 anymore,” he said. “People are working towards age 70 and a lot of people between 65 and 70 will still be earning to contribute towards a mortgage, and people have been taking mortgages later on.
“Had these people been in rented accommodation they would still not own a house,” he pointed out, adding that many older people’s house prices will have increased significantly since they took out their mortgage, meaning their assets have also risen.
simon.allin@ft.com
