Some 35,840 new home loans were handed out to older borrowers in the fourth quarter of last year, marking a 28.2% annual increase, according to UK Finance
A total of 35,840 new home loans were granted to older borrowers, representing a 28.2% annual increase in the final quarter of last year, according to UK Finance
The organisation’s later life mortgage lending report, which focuses on borrowers aged 55 and over, revealed that lending amounted to £5.6bn in the fourth quarter, a rise of 38.6% compared to the same period the previous year. Within this total, there were 5,700 new lifetime mortgages advanced during the fourth quarter, marking a 6.7% annual increase. The value of this lending reached £510m, a 24.4% surge compared to the same quarter a year earlier.
Furthermore, some 343 retirement interest-only mortgages were advanced in the fourth quarter, up by 35.6% annually. The value of this lending was £35m, an increase of 34.6% compared to the same quarter a year prior. A retirement interest-only mortgage allows borrowers to pay just the monthly interest amounts throughout the term of the mortgage until either the death of the last remaining borrower or when the last remaining borrower moves into long-term care.
As for lifetime mortgages, monthly payments are not required. The mortgage is repayable upon the death of the last remaining borrower or when the last remaining borrower moves into long-term care. The interest accrues over the lifetime of the mortgage. However, many lenders will permit borrowers to make full or partial interest payments on a monthly or occasional basis.
Concerns have previously been voiced over how borrowing into one’s later years could impact retirement plans. For the older demographic taking on new debt, it’s important to evaluate how such a commitment might influence the inheritance they intend to leave behind.
UK Finance’s lending figures also include general and buy-to-let property purchases, as well as remortgaging activities. Toby Leek, NAEA (National Association of Estate Agents) Propertymark president, said: “Even with interest rates at relatively high levels, this report demonstrates that older people still feel confident enough to borrow money to finance their future home purchases.
“This trend is being reflected across all buyers, with the Bank of England’s Money and Credit Report for December 2024 finding that net mortgage approvals increased to 66,500 in December. However, with the economic landscape remaining reasonably unsettled, many people’s finances may be stretched meaning they need to borrow for longer, not out of choice but out of need.
“Much of the country will now be eagerly awaiting interest rates to track downward so that mortgages can continue to become more affordable, allowing others the chance to make their next home moves a reality.”
