People choosing longer mortgage terms means two in five of all new mortgages taken out in Q2 this year will go beyond a borrower’s pension age, an analysis found.
An analysis of lending data carried out by LCP, based on figures from the Bank of England, showed this was a rise on the three in 10 mortgages that ran into retirement at the end of 2021.
The firm said lending into retirement had remained high, despite mortgage rates declining.
In total, more than a million new mortgages issued since the end of 2021 are expected to run past a borrower’s pension age.
Borrowers aged between 30 and 49 make up the largest group taking out these mortgages, with 33,493 lent to people aged between 30 and 39 and 35,092 to people aged between 40 and 49. This was up from respective totals of 27,109 and 31,065 during the same period last year.
A notable number of borrowers aged between 50 and 59 are also opting for mortgage terms that would take them into retirement, totalling 21,021 in Q2 this year, up from 18,551 in 2023.
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Meanwhile, just 3,930 of these marathon mortgages were taken out by borrowers under the age of 30, up from 2,908 a year ago.
As for borrowers aged between 60-69, 5,766 took out mortgages with terms that would run into retirement, as did 741 people aged 70 and over.
These were higher than the respective totals of 5,766 and 611 in 2023.
LCP said from 2022-24, the increase in long-term mortgages seemed to be more common with younger borrowers, with a 30% rise among people under the age of 40.
Steve Webb, partner at pension consultant LCP, said: “There is increasing evidence that taking out a mortgage [that] runs past pension age is an entrenched feature of the mortgage market, rather than a temporary blip. This has profound implications for retirement planning, as it is likely to mean that savers may end up using up already inadequate pension pots to clear a mortgage balance.
“Anyone involved in helping today’s workers plan for their retirement must now factor in the possibility that housing costs will run into retirement or will have to be funded from already meagre pension pots.”
