One in four, or 12.5 million, people in the UK are set to have a mortgage at retirement, research from Prudential reveals.
The research also shows that just over four in 10 first-time buyers are over the age of 35 and that over 10 million people over 35 have started a new mortgage term.
Prudential says that as first-time buyers become older and more people start a new mortgage term when they move home, a growing number of people will see their mortgage crash into their retirement.
Pru predicts the luxury of owning a home outright before retirement is going to be a thing of the past. Ali Crossley, director for Prudential's equity release plans, says: “The reality is that pensioners are still going to be paying off the mortgage as they hit retirement – a timewhen their average income drops by almost £4,200 and other financial pressures come into play.
“However, people's attitudes are catching up with reality and they are less concerned about owning their home outright. Only half of homeowners nowadays feel it's important to own their home outright, and the most realistic generation are those in the 55 to 64 age bracket whoare facing retirement issues.”
The Prudential research shows property is increasingly viewed as an asset to be leveraged throughout life, also evident in the recent Bank of England figures which show an explosion in mortgage equity release – up 20% in the last quarter of 2003.
With almost half of homeowners actively using or planning to use their home for retirement funding, Prudential predicts that releasing equity in retirement will become a natural part of retirement planning as people need to unlock cash from their home and are more willing to do so.