"Extending mortgage terms, while appropriate for some, is a symptom rather than a solution to today’s affordability challenge."
- Emily Shepperd, chief operating officer at the FCA
The proportion of mortgage customers over 67 is estimated to be almost 10% by 2050, according to statistics from the FCA.
Speaking at the Building Societies Annual Conference, Emily Shepperd, chief operating officer at the FCA, said that "lending into retirement is moving from a niche to a norm", with the projected median age of a first-time buyer at maturity now at 65 years old, up from 56 in 2005.
The proportion of mortgage customers over 67 is currently less than 2% of all loans, but is expected to rise to 5% by 2040 and almost 10% by 2050.
Shepperd said that building societies are "well acquainted" with the risks and needs of customers looking to borrow in later life. Speaking to building society staff, she said "now is the time to ask yourself about the products and services you will provide to those borrowers to meet their needs responsibly and help them meet their financial goals - what will you need to do to support this growing population of customers and deliver good outcomes?"
Recent research from the BSA found that becoming a first-time buyer is the most expensive it has been for around 70 years.
The latest Census points to fewer households owning their home with a mortgage in 2021 – 4% lower compared than in 2011. Shepperd says this trend will continue as more mortgages mature - with older generations owning outright - and younger generations less able to buy their first home.
She also noted that a rise in longer mortgage terms: mortgages lasting longer than 30 years made up 35% of sales last year.
Shepperd continued: "There are of course trade-offs; borrowers can reduce their monthly repayments and access the property market - but pay more overall, potentially at the expense of other important parts of their financial life, such as paying into their pension, and have fewer options when facing financial difficulty.
"Extending mortgage terms, while appropriate for some, is a symptom rather than a solution to today’s affordability challenge.
"Unaffordable mortgage debt is not just a financial or balance sheet problem. It leads to wider and deeper problems for individuals and society.
"We need to consider what the appropriate level of risk for individuals and institutions should be in the trade-off between homeownership and long-term debt."
