New research has found that one in three people aged 25 to 45 still expect to be paying off their mortgage in their 60s.
The latest Generation Rent report from Halifax shows that delays in getting onto the housing ladder are leading to increasing worries about retirement for many.
According to the report, the average age of a first-time buyer is now 30.4 years – nine months older than in 2010.
More than one in 20 still expect to be paying their mortgage over the age of 70, while almost one in 10 expect to be paying their mortgage throughout their life.
Under half of all respondents (46%) believe they will be mortgage-free before they retire, falling to just a third of non-homeowners.
Buying with a partner (49%) is the most likely measure a would-be first-time buyer is willing to consider to make owning a home more affordable. Extending a mortgage beyond 25 years is the second most likely measure (34%).
In 2007, the proportion of first-time buyers taking up a 35-year mortgage stood at 16%. By 2015 this figure had grown to more than one-in-four (26%). Over the same period, the share of mortgages with a 20 to 25-year term dropped from 48% to 30%.
Craig McKinlay, mortgages director at Halifax, said: “Despite the barriers and the understandable concerns, it’s very positive to see that younger generations are still striving to get onto the housing ladder, with more than 300,000 taking that first step in 2015.
“This recovery has been fuelled by a number of factors, including an abundance of successful government initiatives and the affordability of monthly mortgage repayments due to the continuing low interest rate environment and some very competitive deals.
“Although many of those late to the ladder will inevitably still be paying their mortgages later into life, they are increasingly taking a range of measures to ease the burden.”
One in three (34%) respondents expects to work beyond retirement age to clear their mortgage. For current owners this is 28%, but for those not yet on the housing ladder, two-fifths (39%) believe they will be working later in life.
Almost half (44%) are worried that they won’t be able to afford their mortgage payments in retirement, while a similar amount (45%) are worried that the cost of their mortgage will mean they have to work longer.
McKinlay said: “Borrowers should be cautious when looking to extend their mortgage beyond 25 years. This will not only increase the overall cost of the mortgage, but could have a potential knock on impact on their quality of life in retirement.
“A longer term will reduce monthly payments, but as homeowners build up equity they should look to reduce this term or make overpayments to ensure that the dream of owning their own home doesn’t turn into an unnecessary nightmare in later years.
“A £50 monthly overpayment to a mortgage of £140,000 spread over 25 years will reduce the term by two and a half years and save more than £7,500.
“Home ownership clearly remains a key aspiration for young people and 2015’s strong first-time buyer numbers show the resilience of Generation Rent. Despite their concerns, they are becoming increasingly resourceful in their fight to reach the ladder.”
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