Gone are the days of a steady path to home ownership.
Moneyfacts reports that it is “no longer typical for someone to buy a home in their 20s, trade up in their 30s and 40s and pay off the mortgage in their 50s and 60s”. Instead, home owners aged 65 and over are predicted to have double the mortgage debt over the next few years.
The article is based on
a new report by the International Longevity Centre-UK (ILC-UK) and the Building Societies Association (BSA), which says that borrowing into older age is set to become far more common. It reveals that “over 65s mortgage debt is set to double by 2030, rising by more than £19bn”.
Moneyfacts says: “This is thought to be due to changing demographics and current economic trends, such as house price inflation, stricter credit conditions and low wage growth, all of which is impacting when people can buy, trade up and pay off their home.”
If the current trend continues, over 6% of those aged 35–64 will not have paid off their mortgage before retirement. By 2030, it is predicted that 58% of all housing wealth in the UK will be held by over-65s – and the majority of that could be mortgaged.
Moneyfacts article
Difficulty for first time buyers
For those first starting out on the property ladder, the situation is not much better.
Property Wire reports on findings of a new study by Nottingham Building Society, which finds that more than one in three UK first time buyers “have missed out on potential home deals because their deposit was too small to secure a mortgage”.
The article says: “Some 35% of would-be first time buyers found themselves in this position and around half had more than 10% of the purchase price saved”.
Some 18% of those taking part in the study said they had a deposit of less than 10%, while 17% had less than 20% of the house price they were planning to buy, revealing just how hard it has become to save for a deposit.
Property Wire cites figures from the Council of Mortgage Lenders, which show that total borrowing by first time buyers hit a record of £53.2bn last year. But despite this, people are still struggling to buy because a 10% deposit is not deemed enough.
£19bn
The amount mortgage debt held by over 65s in the UK is expected increase by 2030
The article quotes Ian Gibbons, senior mortgage broking manager at Nottingham Mortgage Services, who comments that the withdrawal of the
Help to Buy mortgage guarantee scheme may have had an impact on the overall market.
Property Wire article
A risky business
In Scotland, homebuyers are steering clear of ‘risky’ mortgages, reports Stephen Naysmith for
The Herald Scotland. It comes after housing and homelessness charity Shelter Scotland raised concerns about “a 23% rise across the UK in mortgages, where the value of the loan given is at least 4.5 times someone’s salary”.
Citing recent figures, Naysmith notes that only 2% of borrowers in Scotland took out such deals between 2011 and 2015. In contrast, in South East London, the number of such mortgages doubled in the same amount of time – from 1,286 to 2,631. “These new statistics have heightened concerns that lessons from the financial crash appear to be forgotten in parts of the UK,” he writes.
The Bank of England deems any mortgage worth 4.5 times a person’s salary as “risky”, and warns that people taking out such loans – who are unable to maintain payments when circumstances change – are more likely to lose their homes.
Liam Brooke, co-founder of peer-to-peer lending business Lendy, commented that there may be various factors preventing rash lending in Scotland. These include the oil industry slowdown, and banks being less willing to lend in Scotland and Northern Ireland.
With so much uncertainty in the UK mortgage market, it is important that people fully understand their options. Professional financial advice can help homeowners or potential buyers to make sensible decisions, and avoid financial disasters.
The Herald Scotland article
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