Over-65s mortgage debt should rise from just over £20bn to just short of £40bn by 2030, an International Longevity Centre-UK report supported by the Building Societies Association has found.
Due to high house price inflation, tighter credit conditions and low wage growth people are expected to only buy their first home in their late 30s and 40s – and with longer mortgage terms to boot.
By 2030 the report predicted £3.3 trillion or 58% of all housing wealth in the UK being owned by the over-65s.
Paul Broadhead, head of mortgage policy at the BSA, said: “The first question for national policy-makers, including government, is whether action should be taken to try and maintain the ‘traditional’ market.
“In my view the socio-economic changes lenders and consumers are already experiencing are unstoppable.
“So instead the focus must be on adapting to a changing market. Top priority must be given to radically increasing housing supply across all tenures, including recognising shared ownership as a tenure in its own right.
“We must also respond as an industry to reflect the changing needs of customers. This will include an increasingly intergenerational approach to home ownership, as parents and grandparents borrow to release some of their housing wealth to support the younger generation. It is the combination of multiple factors that will drive greater levels of mortgage borrowing in later life.”
Ben Franklin, head of economics of ageing from the International Longevity Centre-UK, said: “The housing market must better adapt to our ageing society, building more homes for all ages across a range of tenures.
“Over the course of a lifetime, including in retirement, consumers will need to have access to the right mortgage products and advice in order to maximise their long run financial wellbeing.
“Building societies have made a good start in this regard, but, this is a whole of market challenge that will ultimately need whole of market solutions.”