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Mortgage market must seize the opportunity of our ageing population – Morley

by: Esther Morley, managing director, Secure Trust Bank Mortgages
  • 08/08/2018
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Mortgage market must seize the opportunity of our ageing population – Morley
In this country we are notoriously bad at thinking about our own retirement.


Just 35% of people aged between 45 and 54 have given a great deal of thought as to how they will manage in retirement, according to the Financial Conduct Authority (FCA).

But financial provision for retirement is something that we can’t afford to ignore. By 2040, nearly one in seven Britons will be over 75, according to a report by the thinktank Resolution Foundation .

This means that the old age dependency ratio, the number of individuals over 65 for every 100 of working age, for the UK is on a steep upward curve.

It is expected to hit more than 35 by 2025 and 51 by 2075, according to the Organisation for Economic Co-operation and Development (OECD).

So, in just over half a century, there will be one person of retirement age in the UK for every two who are considered to be of traditional working age.

These are forward looking projections, but you can’t afford to ignore them as the underlying trends are impacting your clients today.


Older borrowers have become more common

Just think about how many of your clients actually retire at state retirement age?

The concept of completely retiring as you approach 70 is becoming a bit of an anachronism.

A growing number of older people have realised they need to supplement their pension income if they want to maintain their lifestyle, often through part-time work, self-employment or a mixture of both.

According to the Office for National Statistics (ONS), the proportion of people working aged over 65 has doubled since records began in 1992.

Official statistics also reveal that people over the age of 65 have accounted for the fastest area of growth in the self-employed sector, increasing from just 159,000 in 2001 to nearly half a million in 2016.

And, more than a fifth of all part-time self-employed workers are 65 or over.


Mortgage implications

From our experience, it is not uncommon to receive a mortgage application from business owners who are reducing their involvement as they get older but continue to draw an income.

The result of these factors is that mortgage lending into retirement is rarely just a case of a lender raising its maximum age at the end of the term.

Older borrowers increasingly have the income to support a mortgage beyond their state retirement age, but that income is usually from multiple sources, as it may include more than one pension, plus earnings from employment, and there is often the added complexity of self-employment.

The population is ageing, and the opportunity is now.

The market for mortgages that stretch beyond retirement age is continually evolving, as lenders respond to shifting demographics.

You are well placed to advise your clients on the best lending options that will take an individual approach to properly considering their income as well as their age.

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