FCA: Number of mortgages lasting into retirement soars

The Financial Conduct Authority (FCA) has revealed that 40 per cent of borrowers who took out a mortgage in 2017 will be aged over 65 by the time their mortgage matures - almost double the number recorded a decade ago.

The City watchdog said that the 40 per cent figure represents dramatic shift from the just 22 per cent of mortgages taken out in 2012 that were expected to run into the borrower’s retirement.

While the typical length of time a buy will take out a mortgage for is traditionally 25-years, the FCA now says that 30-year terms have now become the norm, with 34 per cent of loans taken out in 2017 lasting 30 years or more.

Most lenders now allow mortgages of 35 years, while Halifax and Nationwide, the two biggest lenders, will offer loans with 40-year repayment terms.

The potential problems this may cause in later life due to the restrictions on saving for a pension and dealing with financial shocks, is also exacerbated by the fact many buyers are now delaying buying their first purchase until they are in their 30s as they save to afford the deposit.

A range of factors, including subdued earnings growth, changing working patterns, increasing household debt and lower saving rates suggest many households may lack financial resilience to withstand financial shocks,” the FCA said in its 2019 Sector Views on how the financial system is working as a whole.