Homeowners in the UK at Risk of Pension Crisis Due to 'Ultra-Long' Mortgages

Homeowners are taking out very long mortgages to buy homes. This can cause problems for their retirement savings, experts say. More than 40% of borrowers are getting mortgages that won't be paid off until after they turn 66, the current retirement age. Many young people under 30 are getting these long mortgages, more than double the number from before. This worries experts because it might mean these homeowners will have to use their retirement money to pay off their mortgages when they're older. The difficulty of buying a home is making many young people take on these very long mortgages. This could be risky for their future retirement. The average mortgage length for first-time buyers in the UK is now almost 31 years, up from about 27 years in 2014. In London, 11% of people under 30 took out mortgages with terms of 35 years or more in 2020. By 2023, this number had increased to 27%. In the last three months of 2023, over 3,600 homeowners under 30 got mortgages that will last into their retirement, a 139% increase from 2021. Experts are concerned that many workers don't save enough for retirement. Some people might have to use their retirement savings to pay off their mortgages, which could lead to financial problems in old age. Mortgage lenders need to think about whether giving out these long mortgages is really good for the borrowers. Halifax, a bank, has set a new age limit of 70 for homebuyers to try to reduce risky mortgage lending. Around 3.5 million private sector workers don't contribute to a pension in a year, according to the Institute for Fiscal Studies.