Millions may still have a mortgage in their 70s as we buy first homes later
By Nick Mcdermott
Last updated at 2:48 AM on 24th October 2011
Millions are at risk of becoming ‘OAP mortgagees’ as they buy their first homes later in life.
Many are being forced to rent for much longer than intended because of job insecurity and a credit drought.
Banks and building societies are also demanding large deposits before approving loans.
OAP debt: Millions of Brits could be paying off the mortages well into their 70s
As a result, more than a quarter of private tenants currently seeking to buy are now in their 40s.
If they do manage to get on the property ladder, they will be faced with either paying off their mortgage faster than the 25-year norm, or being lumbered with repayments well into their 70s.
The number of households renting privately has risen by more than a million in less than a decade – from 2.1million in 2001 to 3.4million in 2010.
More than half of these tenants feel they are stuck in the rental sector and would like to buy but simply cannot afford to, according to research conducted for property website Rightmove.
‘Over half of those in rented accommodation would like to buy but can’t make the sums add up and, as a result, are trapped,’ said Miles Shipside, the firm’s commercial director.
‘The global economic woes that have left first-time buyer numbers at record lows will shatter the goals and aspirations of many as they face the reality of renting for far longer than they originally planned.
Trapped renters over the age of 40 could face the prospect of being an OAP mortgagee, or face difficulty getting a 25-year mortgage term if it takes them beyond lenders’ retirement- age criteria.’
Lenders have been slashing their charges as the Bank of England’s base rate remains at a historic low of 0.5 per cent – but with rents predicted to rise due to a shortage of supply, tenants will find it increasingly difficult to save an adequate deposit.
Last week a report found that rents in England and Wales reached a record high of £718 per month in September, while soaring inflation, energy price rises and a stagnant economy are putting further strain on household finances.
‘The momentum of the runaway rental train shows little sign of slowing,’ Mr Shipside said.
‘New tenants are still looking to clamber aboard in their search and are finding a dwindling number of places to rent, as existing tenants have limited exit opportunities and stay put.
‘The rental journey is the only real option for many, and the majority seem resigned to having to pay more.’
Last year, a study by insurance specialist Aviva found that one in ten homeowners over the age of 75 is still paying off a mortgage, with an average outstanding debt of £72,500.
On a more positive note, mortgage-approval rates showed signs of recovery in August.
The Bank of England recently reported 52,410 home-loan approvals during that month – the most since December 2009.
But despite the improvement, the figure is still well below the 90,000 monthly average seen before the crash.