The number of older borrowers taking out longer loan terms has increased 156% over the last five years, Quilter reveals.
Analysing data from New Freedom of Information, Quilter found that in the first nine months of 2024, 22,103 mortgages with a term of 35 years or more were sold to people aged over age 36.
This is the highest since 2018 when the figure reached 15,307.
Quilter mortgage expert Karen Noye says this highlights “growing concerns about housing affordability, rising interest rates, and changing socio-economic trends”.
In 2020, data shows that there were just over 5,900 such mortgages issued. Noye states that this “paints a striking picture of how financial pressures are reshaping homeownership”.
However, given that those taking out a mortgage for 35 years or more from the age of 36 will be at least 71 when it is fully repaid.
Quilter suggests there is a risk that their monthly repayments could adversely affect their quality of life in retirement.
Assuming someone aged 36 takes out a £250,000 mortgage with a 35-year term at an interest rate matching the current Bank of England base rate of 4.75%, Quilter notes that they could expect to pay a monthly repayment of £1,145.
Noye adds: “The continued rise in property prices has made it increasingly difficult for buyers, particularly those entering the market later in life, to afford homes without significantly extending the repayment term.”
“At the same time, higher interest rates have pushed up monthly payments, prompting many borrowers to stretch their mortgages to 35 years in an effort to reduce these costs.”
“Additionally, demographic and societal shifts mean that many people are purchasing their first homes much later in life. The average age of first-time buyers has steadily risen, reflecting the challenges of saving for deposits in a high-cost living environment. For older buyers, longer terms help ease affordability constraints but come with significant trade-offs.”
“The ramifications of this shift are far-reaching, especially as more people approach retirement age with mortgage debt still to repay.”
“Retirees on fixed incomes may find it challenging to manage mortgage payments alongside other living costs, particularly if they have not accounted for this in their retirement planning.”
“Furthermore, longer mortgage terms mean borrowers pay significantly more in interest over the life of the loan, increasing the overall cost of homeownership. For many, this could erode their ability to save for retirement or meet other long-term financial goals.”
“The data also raises questions about how this will impact broader economic trends. A generation retiring with outstanding mortgage debt may place additional pressure on state support systems and the housing market itself, as some may be forced to downsize or sell properties to fund their later years.”
“While there are several risks to consider, a longer mortgage term does not always spell bad news. Certain types of mortgage products allow you to make overpayments, which could help to make repayments past retirement age more manageable. Overpaying can also help to reduce the amount of interest paid by decreasing the overall term length.”
“If you are considering committing to a mortgage for 35 years or more, it is important to seek professional financial advice where possible.”
“A financial planner can help you find the best mortgage product for your circumstances and consider your finances in the round to ensure you have the flexibility to overpay should you wish to. At the same time, they can help you plan for a comfortable retirement with the finances available to afford your mortgage repayments.”
