More people are taking out home loans in later life, according to figures from UK Finance
There has been a sharp increase in the number of people taking out mortgages in later life as more people continue to work after pension age, data has revealed.
There were 35,840 new loans to people over the age of 55 in the last three months of 2024, an increase of 28.2 per cent since the same period the previous year, according to figures from UK Finance.
The trade body said the value of this lending was £5.6bn, which was up 38.6 per cent compared with the same quarter in 2023.
One of the key reasons people are taking out loans in later life is due to affordability issues. Many now work longer than their parents to support their families and pay off their mortgages, as rising costs have made it harder to pay off loans.
In the past decade, a year has been added to the age an average man leaves the labour market, and for women, the figure is nearly 18 months.
Men are now typically ending their working lives just four months before they turn 66, while women are doing so at 66-and-a-half.
Additionally, more older people are now more comfortable with taking on some forms of debt than previous generations.
James Tatch, head of analytics at UK Finance, said: “After a decline in later life lending in 2023, a recovery was seen throughout 2024 as rates started to fall and inflation eased.
“The number of loans to older borrowers increased significantly. This growth reflects the recovery seen across the wider market, but also the industry’s response to the ageing demographic of the country.”
He added that growth in later life lending is particularly strong in remortgaging where customers withdraw equity.
“As more individuals move towards and enter retirement, there is a growing demand for financial products tailored to their needs. The industry is working hard to adapt to these changing demographics, offering solutions that help customers manage their finances effectively during this life stage.”
Another reasons for older people taking out mortgages in later life can be attributed to differing personal circumstances.
Some people are wanting to downsize and free up funds, while others are relocating to different regions, potentially to be closer to relatives.
Nick Mendes of brokers John Charcol said: “On the societal side, people are living and working longer, with many continuing in employment or self-employment well beyond traditional retirement ages. This extended working life allows for greater financial stability and supports borrowing into later years.
“Furthermore, there has been a cultural shift, with older borrowers becoming more comfortable taking on debt later in life, whether for property purchases, home improvements, or even helping family members financially.”
What later life mortgages are available?
Lifetime mortgages: These mortgages are a type of equity release that lets you borrow money against the value of your home by taking out a loan secured on the property. It means you can release tax-free cash without needing to move out.
This means you won’t have to repay the loan until your home is sold later in life.
To apply for a lifetime mortgage, all applicants must be at least the minimum age set by your provider (typically 50 to 55) and the property must be your main residence.
You may be able to take the money as a lump sum or a series of lump sums. The loan doesn’t have to be fully repaid until until you die or move permanently into long-term care.
Retirement only mortgages: A retirement interest-only mortgage – also called a “RIO mortgage” – is a special type of home loan if you’re an older borrower (over 50) whose needs aren’t met by a standard mortgage.
It can get harder to get a new mortgage as you get closer to retirement age, so a RIO mortgage can help by:
- letting you mortgage your home in later life, or
- providing an alternative to equity release.
It’s similar to a lifetime mortgage where the loan is usually only paid off when you sell the house, die or move into long-term care, but you don’t have the risk of compound interest.
As a result, there are more options on the market for people looking to get a loan in their 60s and 70s.
UK Finance data also showed there were also 5,700 new lifetime mortgages handed out between October and December last year, up 6.7 per cent. Some 343 retirement only mortgages were also given, an increase of 35.6 per cent.
Other firms have confirmed they have seen an increase in older people looking for loans.
There was a 51 per cent increase between 2023 and 2024 in searches for mortgages for people 65 or over whilst this rose 64 per cent for those in that age bracket that were first time buyers, according to Legal & General.
Kevin Roberts, managing director at Legal & General Mortgage Services, said: “Age need not be seen as a barrier to homeownership in 2025. Since 2023, we have seen an 87 per cent increase in mortgage searches by brokers on behalf of clients aged between 56 and 65; even among over-65s the increase stands at 51 per cent.
“For those entering the housing market in their 50s and beyond, there’s no shortage of options. Many lenders offer short-term mortgages – typically spanning 10 to 20 years – although they can often involve higher monthly repayments.
“Retirement interest-only and lifetime mortgages are sometimes a great choice for older borrowers, but they aren’t always the right fit for every financial situation.”
