Later life lending to set to double in the next decade.
According to joint research, carried out by the Centre for Economics and Business Research (CEBR) and commissioned by more 2 life, have found that lending to property buyers and owners over the age of 55-years-old is set to increase by 85.7% from £295 billion in 2019 to £548 billion by 2029.
The figures suggest a continuing trend of lending rises to retirees, albeit at a slower pace than the next five years. In 2014, later life borrowers owed £200 billion. This figure is set to rise 98% by 2024 when later life lending is set to exceed £397 billion.
The astronomical rise in later life lending is also set to increase further in older age demographics. Lending to over 65s is set to increase by 117% by 2029, expanding from £91 billion in 2019 to £199 billion within a decade.
Much of this dependency in additional lending has been attributed to people buying property in later life and thus acquiring a more expensive mortgage and poor saving figures in the next generation of retirees. Savers aged between 65 and 74 are able to save £3,050 on a net annual basis with 48% clear that they would struggle to fund any unexpected bill of over £5,000.
35% of this age group also believe their spending exceeds their annual income. Therefore, more people are forced to use the equity in their homes or unsecured finance to help fund issues that may arise in retirement.
Dave Harris, Chief Executive Officer at more 2 life, comments:
“With more people buying their first homes later in life and the increasing use of unsecured debt, we are finding that more people are entering retirement still committed to ongoing repayments. While this might be something that can be managed while someone is working, it is harder to sustain when you are on a fixed income.
“We expect to see this trend continuing and by 2029, over-55s will hold £548 billion worth of debt. Not only are we seeing debt levels increase, but 65-74 year olds have just £3,100 left at the end of the year to save, invest or use to meet any unexpected expenses or manage additional costs. This is a worryingly small safety net and suggests that managing debt in later life may well become the norm for some people.
“One potential solution to this – and other issues facing over-55s who are trying to make their incomes last for increasingly longer retirements – is to consider how their housing equity can help. Later Life lenders have stepped up to this challenge and we are seeing increased flexibility as well as a wider choice of products designed to cater for today’s retirement lending market. However, we must ensure that we do not become complacent and with growing numbers of consumers interested in how they can access their housing equity, it is up to us to lend a helping hand to ensure they are able to enjoy the retirement they deserve.”
