Mortgages to older borrowers drop 37.1% amid higher rates - data

Older borrowers were deterred by high mortgage rates last year, bank data suggests.

Quarter four figures from UK Finance show a 37.1% drop in mortgages advanced to borrowers over age 55.

The value of lending was also down 42.4% to £4.1bn.

Equity release loans also fell, with lifetime mortgages down 40.1% annually and retirement interest-only mortgages down 43.3%.

Commenting on the figures, Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Older borrowers are ditching mortgages by the bucket-load, thanks to higher interest rates. 

“Hundreds of people are focusing intently on repaying the debt before they put their feet up, thousands are delaying equity release, and the number of older landlords snapping up new buy-to-let loans has more than halved.

“Higher house prices and more complicated personal lives have been driving more people to pay their mortgage later in life. It means that, all things being equal, we'd expect the numbers of retirees still paying the mortgage to be rising. Clearly, sky high mortgage rates have turned the tables, and persuaded people to double down on their efforts to repay their debts before retirement – to avoid entering their golden years weighed down by huge monthly repayments. The number of retired people with new mortgages is down almost a third in a year.

“New buy-to-let mortgages have fallen off a cliff among older landlords, with the number of these loans halving in a year. Given that older people make up more than a fifth of all buy-to-let loans, this has a wider effect on the broader market. As more older people decide that being a private landlord isn’t as rewarding or as tax-efficient as they had hoped, it means they’re selling up, which puts more pressure on rising rents again.

“The more positive news is that the pressure has been easing since these figures were released, and lower mortgage rates will have taken less of a toll in recent months. However, falling mortgage rates have stalled more recently, as the market digests the fact that inflation is more stubborn than they expected. It means we can’t rely on swift rate cuts to get us out of trouble financially in retirement.”