Around £1.36 billion a year is being paid out in mortgages by more than 100,000 over-65s, despite the potential risks of keeping up payments after the State Pension Age.
The news comes as part of research from equity release lender More 2 Life, which reveals that up to 103,000 households with residents over the age of 65 are paying mortgages, with around 81,000 households in the 65-74 age group and 22,000 in the over-75 age group.
More 2 Life believes the high number of over-65s still clearing home loans reflects changing work patterns with more people working past traditional retirement ages and the rising age of first-time buyers.
It forecasts the issue is likely to become a bigger problem as more homeowners with interest-only mortgages come to the end of their term – the Council of Mortgage Lenders estimates 150,000 interest-only loans will mature each year until 2020.
Jon King, managing director of More 2 Life, said: “There is a potential mortgage time bomb ticking with pensioners paying home loans way past traditional retirement ages. Some can afford to pay off their mortgages but many will face income shocks and could really struggle if they still need to pay off a home loan as well as paying for the basics.”
More 2 Life estimates around 4.6 million over-65s own their homes outright while another 2.2 million either rent privately or through social housing.
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