According to More 2 Life’s later life lending report, out today (June 24), the over-55s are expected to borrow about £295bn by the end of 2019 — a total which is predicted to rise by 85 per cent to £548bn over the next 10 years.
This is mainly due to retirees having on average lower savings and more debt than ever before, the report stated.
The findings showed that over the past five years, the total value of debt held by the over-55s is estimated to have increased by 47 per cent. This is forecasted to increase by a further 35 per cent to £397bn in the five years to 2024.
On top of this, those aged 75-84 years who are still paying a mortgage owed an average of £78,000 on their property while 35 per cent of over-55s said their expenditure exceeds their income.
The report also states that over-65s will on average be £16,500 in debt by 2029 and that almost half (48 per cent) of over-55s do not have enough savings to cover an unexpected £5,000 bill.
A number of factors were driving the rising debt levels, according to the report.
First-time buyers getting on the property ladder later and higher house prices have caused a rise in mortgage debt and has led to people carrying mortgage debt beyond traditional retirement age.
Alongside this, the number of people who own more than one home has risen. Figures published by the Resolution Foundation, used in the report, showed that one in 10 British adults now owns a second property and are therefore more likely to be in mortgage debt.
Of those over-55s still in mortgage debt, 68 per cent were on a repayment mortgage — where the consumer pays off the capital of the home and the interest in monthly payments — while 23 per cent were on interest-only plans.
The report stated this was "worrying" as retirees on interest-only policies could face considerable financial strain when the final capital repayments are due.
Dave Harris, chief executive at More 2 Life, said a solution to such problems was to consider how housing equity could help relieve debt or bump up savings.
He said: "Later life lenders have stepped up to this challenge and we are seeing increased flexibility as well as a wider choice of products designed to cater for today’s retirement lending market.
