The latest piece of research into mortgage lending in the UK has found that the number of loan repayment terms that extend into retirement has stayed high, even though rates are falling.
This research was carried out by the Bank of England and is based on data secured by Steve Webb, an ex-pensions minister. What the data reveals is that more than two out of every five mortgages agreed during the second quarter of this year came with repayment terms that extend into retirement. By contrast, during the final quarter of 2021, that was the case for just three out of every ten.
When the numbers are looked at over a three-year period, it is thought that more than one million loans have been agreed with terms of repayment that extend into retirement.
The new figures indicate that younger borrowers are the demographic driving the increase in such deals. There has been a rise of 30% in the volume of borrowers below the age of 40 who are agreeing mortgages with repayment terms that stretch past their working years.
It has been suggested that this may be a response to rises in interest rates, which have led to affordability issues for young people. That is contradicted by the fact that repayment terms of this type remain popular even as rates start to come down.
Mortgage advisors who have done the CeMAP course must be aware that this is now a feature of the market and must advise borrowers of the implications for their retirement incomes.
