Experts are issuing stark warnings as a record number of over 50s are turning to risky mortgages and remortgages to chase cheap deals.
New data reveals a worrying trend of older homeowners taking on massive debt that could spill over into their retirement. This rush to remortgage is being fuelled by the cost-of-living crisis and soaring interest rates.
Legal & General’s latest figures show a huge surge in over 50s hunting for short-term mortgages – often a sign of desperate cost-cutting. The average homeowner in this age group owes a staggering £217,065 when they try to remortgage.
The most dramatic increase was seen in those aged 51-55:
- Average remortgage debt soared by almost 20% in just one year.
- Borrowers in this group now owe an average of £234,716.
And it’s not just short-term fixes. Long-term mortgages, often seen as riskier for older borrowers, are also seeing a massive uptake:
- Searches for 16-20 year mortgages by the over 50s rocketed by 136% compared to last year.
- There was a 156% increase in searches for 10-15 year fixed-rate deals.
Experts fear that many homeowners are sleepwalking into financial trouble. Kevin Roberts, a director at Legal & General, warned: “There is a significant increase in homeowners aged over 50 looking to re-mortgage on a term that is likely to spill over into their retirement.”
Sir Steve Webb, a former pensions minister, echoed these concerns. He stressed that some borrowers could be “gambling with their retirement prospects” by taking on such enormous long-term loans.
The Financial Conduct Authority (FCA) has also raised red flags. Their research paints a bleak picture of the future, predicting that:
- The average first-time buyer will be paying off their mortgage until they are 65.
- By 2050, almost 1 in 10 mortgage holders will be over 67.
FCA chief, Emily Shepperd, warns: “Lending into retirement is moving from a niche to a norm.” This shift could leave millions facing the prospect of working well into their retirement years just to stay afloat.