The amount of debt owed by Britain's pensioners has hit £57bn with one in five still paying off their mortgages, new research reveals today.
The amount of debt owed by Britain's pensioners has hit £57bn with one in five still paying off their mortgages, new research reveals today.
Scottish Widows warned the figure would rise still further as housebuyers take out home loans later and later in life.
The investment and insurance giant today publishes new figures showing that more than 1.1 million retirees are still making regular monthly payments on their mortgage.
Their average outstanding home debt is £38,000, on top of credit card and personal loans with an average balance of £5900. That is a burden many older people can't afford without a wage.
Ann Ferguson, of Age Concern Scotland, said: "Pensioners who still have a mortgage can be pushed into poverty. You can't get benefits to pay your mortgage in the way you can for rent."
Ms Ferguson stressed many homeowning pensioners were also trying to cope with dependents, young and old. Scottish Widows found that one in 12 pensioners have one or more financially dependent children.
The relentless rise in pensioner debt comes as house price inflation forces more and more people to borrow more, and later in life.
Lenders, moreover, are increasingly willing to extend the term of mortgage agreements, often stretching well into retirement, or to help the elderly release the equity in their homes.
Longer and later home loans are also making it far harder for homeowners to put aside the money they need for retirement: mortgage repayments ahead of retirement make it harder to save for old age; mortgage payments after retirement eat into pensions.
Ian Naismith, head of pension market development at Scottish Widows, said: "Our research shows that by the time they come to retire, a significant number of pensioners still have mortgage outstanding on their property, adding financial pressure to their hard-earned retirement fund.
"With more and more people taking out mortgages later, and paying them off later, we see many people turning to the equity in their home as a method of providing income in retirement.
"The knock-on effect of getting on the property ladder later is that money that could have been put into a pension is being used on monthly mortgage payments."
Financial analysts and charities agree that the generation facing the biggest debt squeeze is just coming to retirement. Many Baby Boomers, those born in the decade or so after the Second World War, are approaching retirement with nothing like the savings they need.
Scottish Widows found that one in four homeowners aged between 60 and 64 were still paying mortgages, with an average debt of £42,000 when they needed to set aside retirement cash.
Mr Naismith said: "The study also shows that many pre-retirees, aged between 50 and 59, are a long way from owning their own home - suggesting that the trend of retirees still being burdened by monthly mortgage payments is likely to continue. Of those in this bracket, 42% still have a mortgage with an average debt of £54,300."
Ms Ferguson, too, stressed the problems facing the next generation: "Lenders are now offering younger people mortgages worth up to five times their income or for terms of 40 or 50 years. What will happen to them in retirement?"
