Closer to retirement - and deeper in (mortgage) debt
09/06/2008
A third of the UK population in, or nearing retirement, owe a whopping £207 billion in outstanding mortgage debt, averaging £37,316 per head - according to a new report from Key Retirement Solutions.
The findings, based on the analysis of 4,507 people aged 55 and over, who released equity in their home, show that there has been a 20% rise year on year in the average amount of mortgage debt owed by those in, or nearing retirement.
Further analysis shows:
- A third of all over-55s have outstanding mortgage debt, while 35% of those aged 60-69 years and 29% of those 70 years and over still have mortgage repayments to make
- The average mortgage debt owed by those aged 55-59 years is £29,083, and this amount increases with age to £31,368 for those aged 60-64 years and £32,871 for those aged 65-69
- The over-70s have seen a 23% increase in the level of outstanding mortgage debt compared to 2007, and now owe on average £45,493
Dean Mirfin, from Key Retirement Solutions said: “If this analysis is only part reflective of pensioners as a whole, then this is of huge concern. The rising cost of living is increasingly affecting all of us today, but it is the older generations that are feeling the pinch more than others. With new estimates from Age Concern putting the number of pensioner households living in fuel poverty at 2.25 million, and with an estimated 250,000 pensioner households pushed into fuel poverty by the price rises this year alone, many have little income left to enjoy their twilight years.“
The average monthly repayment on outstanding mortgage debt for retirees is £218.11, yet nearly two-thirds of pensioner couples have a total pension income of less than £10,000, which falls to less than £6,000 for half of single pensioners. For those with an income of £6,000, a deduction of the average monthly mortgage payment of £218 would potentially leave just £282 to cover council tax, all utilities, food, clothing and other expenses each month.
According to the Consumer Credit Counselling Service (CCCS), clients over 60, for the first time, now have the highest levels of debt and they are increasingly seeking help - now equal to the number of under 25s who seek help with their finances.
Chris Tapp, Director of charity Credit Action, commented: "At Credit Action, we are concerned that the stresses on household budgets that everyone is facing, whether it be rising food costs or higher utility bills, affect pensioners to a greater degree. This, coupled with the fact that people had to borrow more and for longer periods in mortgages as house prices have grown over the last few year, means that many are facing tough times and perhaps tough decisions, in order to keep their finances on track. It is vital that people who are worried take action, and the sooner the better."