Economic, demographic and housing market trends are triggering a change in home ownership in the UK, and as a result mortgage borrowing in older age is likely to move from niche to mainstream within the next decade.

This is the conclusion of a new study by the International Longevity Centre-UK (ILC-UK), supported by the Building Societies Association.

It says that the mortgage market is witnessing a marked evolution from the ‘traditional route’ of individuals buying their first homes in their 20s, trading up in their 30s and 40s, paying off debt in their 50s and 60s and then entering older age with little or no mortgage debt.

Since the financial crisis, home ownership amongst 20-29-year-olds has fallen from 53% to 38%. Today, many first-time buyers are delayed from stepping onto the property ladder by factors including low supply of new homes and higher house prices, greater student debt, persistent low real income growth and challenges in saving for a deposit.

As the home ownership life cycle shifts, the time of life by which mortgages are paid off is shifting too: the ILC-UK research has shown that over 6%, or 1.42 million people aged 35 to 64 will not have paid off their mortgage before retirement given the current term of their loan.

If nothing changes, it will become more common for consumers to buy for the first time in their late 30s or 40s, with longer mortgage terms from the outset, says the study. They will be more likely to trade up later in life and repay at least part of the mortgage from retirement income or draw more to fund needs in later life.  By 2030, the ILC-UK projects that £3.3 trillion or 58% of all housing wealth in the UK will be owned by the over 65s.

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