You are here: Home - News -

Debt levels jump among older borrowers

by:
  • 04/07/2018
  • 0
Debt levels jump among older borrowers
Unsecured borrowing among older borrowers has rocketed in recent years, a new study from equity release lender More 2 Life has revealed.

The study found that unsecured debt among those aged 55 to 74 has jumped by 34% over the last four years, compared to the national average rate of increase at 14%.

The typical 55-64 year old has unsecured debt worth £4,685, up from £3,452 in 2012. While the typical single pensioner has monthly income of £2,096, that means this age group has a debt to income ratio of 224%.

Dave Harris, chief executive officer at More 2 Life, noted that while these figures seem relatively modest and manageable while working full time, it will stretch the budget of those in retirement on a fixed income.

He continued: “With continuing issues around insufficient retirement savings and an increasing number of people entering retirement with other types of borrowing like mortgages, the problem is only going to get worse.”

David Sheppard, managing director of Perception Finance, said that there is a desire to buy now and pay later, and suggested that part of the increase in the use of credit cards may be that the nation has become more aware of the additional protections offered when purchasing on a credit card.

He continued: “The UK as a whole is more relaxed to debt than many other countries and well managed debt can be beneficial.  The key though is making sure that those who are struggling are given the resource to overcome this without being duped into spending even more money to do so.”

The study also found that one in ten people aged 65 to 74 are still paying off a mortgage, owing on average £120,000 – up by 24% from in 2013. What’s more, their mortgage debt is larger than the average 55 to 64 year old who owes £113,000.

David Hollingworth, director at L&C, said that there are lots of people in this age group sat on large amounts of equity so may be choosing to increase their mortgage debt in order to release some of that money to fund their lifestyle or pass the money onto loved ones.

He added: “It’s easy to talk about it as if everyone increasing their mortgage debt is in a distressed state, but there are plenty of borrowers in this age group who are asset rich but cash poor.”

There are 0 Comment(s)

Comments are closed.

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
New listed properties fall for first time since December – HouseSimple

The number of new properties coming onto the market in June dropped by 3.8%, the first monthly fall seen since...

Close