Over one million people have taken out new mortgagees that are set to run past retirement age in what is a growing trend.

The data has been supplied for the Bank of England by the Financial Conduct Authority under the Freedom of Information Act, and was later obtained by Steve Webb who is a partner at the pensions consultancy LCP.

It showed that in the final three months of 2021 the number of new mortgages that would run past the age or retirement was 88,931, which was 31% of the total of new mortgages.

While two years ago, again in the final quarter of the year, the total of the latest mortgages at the time that would go beyond pension age reached the higher number of 113,916, or 38% of new mortgages.

For the same period last year, it was a smaller number of 91,394, but as a percentage of all of the new mortgages that were taken out it was a higher 42% that would run past the time of the  state pension age.

Currently the state pension age is 66 years old for both men and women but this will gradually increase again from 6 May 2026, and it will rise to 67 for those born on or after April 1960 again for men and women.


Under 40s the fastest growing age group with a mortgage into retirement

It was found that the fastest growing group of people taking out mortgages lasting into retirement is those aged under 40, and many of them were first time buyers.

For those who are under 30s, it was revealed that there was a 139% increase of into retirement mortgages for the final three months of 2021 compared to the same period for last year.

While there was a 29% leap in the amount of past retirement date mortgages for those who are between the ages of 30 and 39 for the same timeframe.

Over the age of 40 up to those in their seventies, there was a decline in the amount of fresh mortgages that will be paid at state pension age.

Other information compiled by the Bank of England discovered that just under a quarter or 23% of new mortgages to people in their thirties ran past pension age, but now that has climbed to 2 in 5 or 39% of new mortgages.

Yet a mortgage that has been taken out in someone’s thirties, perhaps as a first time buyer, is highly unlikely to be someone’s last mortgage.

The risk to retirement depends on what happens over the course of their working life,  and if they are able to shorten the mortgage term.


What are the major concerns of these trends?

Those who have mortgage debt during retirement may use their modest auto enrolment pension pots to clear the debt, this would leave little for retirement itself and less to live on for their golden years.

It has happened in the past that when people mostly paid off their mortgage before pension age, they could spend their final years in work boosting their pension pot.

Even if mortgages only run to pension age and not beyond, it denies people a period before retirement when they might have paid off their mortgage and put more money away in their pension schemes.

As for mortgage lenders there is little certainty over the future pension income of someone in their thirties today, so they cannot know if borrowers will have enough income in retirement to cover mortgage debts.

Also there is evidence that more people have pulled out of the labour market before they reach pension age.

This places extra pressure on keeping up payments on a long-term outstanding mortgage;


Mortgage rates jump up in April

 The latest figures on mortgage rates released by Moneyfacts will make disappointing reading for mortgage holders, or those who are looking to buy as they grew throughout April.

At the beginning of May the cost of a two-year fixed mortgage rate deal had climbed upwards to 5.91%, up from 5.80% the previous month.

Its UK mortgage trends treasury report found that five-year fixed rates had also jumped up in a similar fashion, rising from 5.39% last month to 5.48% in May.

This is the biggest month-on-month hike in average rates since March for both of the timeframe deals on offer.

One of the main reasons for the rises is the uncertainty over when there will be an  interest rate cut.