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Grey Pound boosts mortgage market - 4 December 2006
Recent figures from the Council of Mortgage Lenders have revealed that more than one in ten mortgages taken out in the UK today are arranged for people over 50 years of age. And the proportion could rise further as this demographic group becomes more adventurous.
Quoted in this week’s Observer newspaper, Larry Banda of Nationwide says, “A lot of people used to see 50 as the target age to pay off a mortgage. But it is much more common now to see people taking their mortgage repayment right up to the wire, just before they retire.” Many in this age group are now re-borrowing on the equity in the family home to travel or buy a property overseas.
There is a question of ethics involved in this kind of lending, as taking out a new mortgage after the age of 50 will leave applicants paying off the loans well into their 70s. Lenders will judge each case on its merits, but under FSA regulations have a duty to lend responsibly, and to ensure that their customers have enough income, post-retirement, to cover repayments.
The culture of so-called ‘empty-nesters’ travelling extensively, and downsizing to a property overseas has become far more widespread in the past few years. Not only are there more over-50s who are financially independent and have larger disposable incomes, but there is also a shift in mindset. People currently approaching retirement are the ‘Baby Boomer’ generation, who grew up in the 1960s, and have a reputation for enjoying the trappings of their hard work.
Dubbed ‘Saga louts’ by some for their less-restrained outlook, this generation is more prepared to make waves as they move towards retirement, and less likely to follow the example of those which have gone before. You only have to look at the Saga and Heyday magazines to see the way the activities and aspirations of this group have changed in recent times.
This is a phenomenon which is by no means restricted purely to the UK. In the US, it is estimated that 178million ‘Baby Boomers’ are set to retire within the next ten years.
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