Retirement lending shoots up as debt for over-65s increases by £7bn in one year

Josh Mines
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The retirement lending market is expected to be worth £142bn by 2027. (Source: Getty)

People over the age of 65 are expected to owe around £86bn by the end of 2018, research out today has found.

Overall debt for over-65s was up from last year's figure of £78bn, as borrowing grew £35bn in just three years.

The figures from the Centre for Economics and Business Research (Cebr) and equity release lender More 2 Life predicted that all types of secured and unsecured debt would top £142bn by 2027.

The figures totted up borrowing including mortgages, credit cards, overdrafts, loans, car finance, hire purchase, student loans, payday loans and store cards.

Average mortgage debt for those aged 65 and over was estimated to stand at around £86,000, 13 per cent higher than in 2013.

Researchers speculated that the sharp rise in debt for over-65s was down to a number of factors, including this generation's use of interest only mortgages, current borrowing trends and relatively modest pension savings.

Louise Overton from the University of Birmingham said:

A growing number of older people are facing important decisions about how to manage their income and assets over a longer period than previous generations, presenting both opportunity and challenge for the later life lending sector.

Among the growing numbers of older people carrying secured and unsecured debt into retirement, some may be doing so as part of a deliberate asset management strategy, but worryingly, this report indicates that a significant minority are doing so to help manage cash flow problems and make ends meet.

Dave Harris, More 2 Life chief executive added: "This rapid increase will only be exacerbated by an ageing population, people buying houses at a much later stage, and shrinking pension pots resulting in low retirement incomes.

"For growing numbers of people aged 65 and over, financial products that draw on the resource of housing wealth may well turn out to be the optimal way for them to solve the financial challenges they and their families have to face in future."

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