Data from London & Country Mortgages shows the younger generation is full of optimism, with the majority of 18- to 34-year-old borrowers stating they believe they will have paid off their mortgage by the time they are 51.
The differences along gender lines surrounding borrowing in later life are stark too with 32% of women saying supporting a family is the main reason they expect to pay off their mortgage later than planned, while just 24% of men gave the same response.
Of those who say they may still be paying off their mortgage after 65, nearly two thirds of women said they do not have a plan, compared to 50% of male respondents.
Over a third of men said they do not think it matters what age you have a mortgage at, compared to a fifth of women, which would suggest men have a more relaxed attitude to borrowing in later life, but are more likely to have formulated a plan.
Realism appears to strike as borrowers get older with 35- to 54-year-olds expecting to have paid off mortgages by 58 while those 55 and over on average think they will be borrowing into retirement age, paying it off by 68.
A group of older borrowers are resigned to a lifetime of debt, with almost one in ten of those over 55 stating they do not think they will ever be mortgage-free.
David Hollingworth from L&C said: “What is becoming increasingly clear is the market has changed, people are facing up to the fact that they are going to have their mortgage for longer.
“The optimism displayed by the younger generation is admirable but perhaps misplaced, and not realistic as our research shows that raising a family, among other commitments, can get in the way further down the line.”
One third on SVR
The data showed 58% of respondents are on fixed rate deals, however nearly a third of customers sat on a Standard Variable Rate (SVR).
Almost half of those who own their house outright said their last mortgage was on an SVR, suggesting borrowers could pay off their mortgage even earlier if they took time to find a better deal.
Hollingworth added: “It’s encouraging to see a large group of borrowers actively managing their mortgage and sitting on fixed rate deals.
“While there may be specific circumstances where sitting on an SVR makes sense, for the most part this group of people could be getting a head start for later life by shopping around and saving themselves a small fortune.”