More than half of new mortgage lending is going to borrowers who will not have paid off their home loan before their 65th birthday, according to a trade association.
Longer mortgage terms and an ageing population are helping to drive the trend towards later life borrowing, UK Finance said.
It said that in 2021, 52% of new homeowner mortgage lending has been for terms which will end beyond the main borrower’s 65th birthday.
This is the first time this proportion has been reached, suggesting later life mortgage lending is set to become more significant, UK Finance said.
In 2014 only around a third of new homeowner mortgage lending went beyond the age of 65, showing how strong the growth has been.
Charles Roe, director of mortgages at UK Finance, said: “There’s been growing demand for mortgages from those aged over 55 and this is set to continue as more people live and work for longer.
“For the first time since records began more than half of all new mortgages are due to end after the homeowner’s 65th birthday, and lending to over-55s has grown even where mortgage lending in the wider market has remained subdued.
“Later life lending both now and in the future will be imperative as existing homeowners look to later life products for accessing equity as they get older.”
Within the wider later life lending market, lifetime mortgages, or equity release products, have continued to grow in popularity over the past seven years as older homeowners look to access the equity in their homes, UK Finance added.
It said there had been a recent modest reduction in lifetime mortgages, due in part to the Covid-19 pandemic, but this is expected to be temporary.
People considering equity release need to weigh up their decision carefully. It could, for example, mean they will have less to pass on in assets to younger generations when they die.
The growth in later life borrowing could have other implications, such as for pension savings.
Some people may end up releasing some of their pension to pay off their mortgage, or if they are borrowing more using their home, they may leave their pension untouched for longer.
Jim Boyd, chief executive of the Equity Release Council, said: “UK Finance’s findings underscore the integral role that later life lending plays in consumers’ long-term security.
“Attitudes towards home finance in later life have changed, and homeowners are increasingly comfortable with mortgage borrowing into retirement and open to the benefits of realising some of their property wealth as they age.
“Property wealth can play an important part in a holistic approach to funding retirement and, as an industry, we must work together to ensure consumers get the information they need to weigh up increasingly complex financial decisions to do this.”