£5bn in new loans handed to older mortgage borrowers in second quarter of 2024
The number of new loans handed to older borrowers was 8.3% higher in the second quarter of 2024 than a year earlier, according to a later-life mortgage-lending report.
Some 32,990 new loans were advanced to older borrowers in the second quarter, with a total value of £5 billion, UK Finance said.
The value of loans was 17.5% higher than the same quarter a year earlier.
The report captures mortgage lending to people aged over 55.
Higher mortgage rates may mean that some borrowers stretch their mortgage terms out for longer, although people may need to weigh up the potential impact on their retirement plans.
There were 5,610 new lifetime mortgages advanced in the second quarter, down 16.9% annually.
And 326 retirement interest-only mortgages were advanced, up by 23% annually.
A retirement interest-only mortgage allows borrowers to pay just the monthly amounts of interest throughout the term until either the death of the last remaining borrower or when the last remaining borrower moves into long-term care. When one of these events occurs, the mortgage ends and the amount outstanding must be repaid in full.
With a lifetime mortgage, monthly payments are not required. The mortgage is repayable upon the death of the last remaining borrower or when the last remaining borrower moves into long-term care.
Where no monthly payments are made, the interest accrues over the lifetime of the mortgage, meaning the amount borrowers owe at the end of the mortgage will be more than the amount borrowed. But many lenders will allow borrowers to make full or partial interest payments.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Property prices have risen much more strongly than many of our savings and unless you’ve been able to squirrel away a decent nest egg or have the support of family, then raising that all-important deposit is extremely difficult.
“At the same time, life isn’t always straightforward, and even when you have bought a place of your own, you can face setbacks along the way, like divorce, which can mean having to start all over again, years down the track.
“This means ever-growing numbers of us are going into retirement carrying housing costs and this weighs down our retirement planning.”
She added that making additional pension contributions, making mortgage overpayments and downsizing may be among the options people could consider to balance mortgage costs against their retirement plans.
