Currently this age group holds £20.1bn of mortgage debt, but the report suggests this will rocket to £39.9bn in the next 13 years, an increase of more than £19bn.
The report points out that the mortgage market is undergoing a ‘marked evolution’ from the old route of people buying their first home in their 20s, moving up the ladder in their 30s and 40s, paying off debt in their 50s and 60s and then entering old age with little or no mortgage debt.
Instead, today’s first-time buyers are delayed from taking the first step onto the housing ladder by the combination of the low supply of homes, rising house prices, student debt, low real income growth and difficulties in saving for a deposit.
In turn, it is now taking longer to pay mortgages off too. The ILC research found that more than 6% of those aged 35-64 will not have paid off their mortgage before retirement.
Ben Franklin from the International Longevity Centre argued that the property market must better adapt to the UK’s ageing society, developing more homes for all ages across all tenures.
He continued: “Over the course of a lifetime, including in retirement, consumers will need to have access to the right mortgage products and advice in order to maximise their long run financial well being. Building societies have made a good start in this regard, but this is a whole of market challenge that will ultimately need whole of market solutions.”
Paul Broadhead, head of mortgage policy at the BSA, added: “We must respond as an industry to reflect the changing needs of customers. This will include an increasingly inter generational approach to home ownership, as parents and grandparents borrow to release some of their housing wealth to support the younger generation. It is the combination of multiple factors that will drive greater levels of mortgage borrowing in later life.”