nigel woollsey

Nigel Woollsey

Online Writer
Published: 08/08/2019

New analysis from Key has revealed that up to half of older homeowners are using equity release to repay debt as they struggle to meet payments. Analysis of customer data suggests that 30% of people are using equity release to repay unsecured debt while 20% are using it to repay mortgages.

Extent of over 55 debts

Some of the startling highlights from this data show that while the average unsecured debt for individuals in the UK is nearly £12,000, some over55s have debts that are nearly double this figure. With this age group owing an average of £10,319 on credit cards and £13,578 on loans, this level of unsecured debt is driving an increasing number of over-55s to the later life lending market – including equity release products and retirement interest-only (RIO) mortgages.

Further analysis suggests that the debt issue spreads across age groups – customers in their 70s owe an average of £9,773 on credit cards compared with £10,926 for homeowners in their 60s. However, even some customers in their 80s owe money on plastic, with average debts of £10,443.

A growing threat

Further analysis suggests that the debt issue spreads across age groups – customers in their 70s owe an average of £9,773 on credit cards compared with £10,926 for homeowners in their 60s. However, even some customers in their 80s owe money on plastic, with average debts of £10,443.

The biggest single debt burden identified is outstanding mortgages – customers clearing home loans on average owe £87,181, the data shows. In addition, credit card debts are eating up to 40% of the average state pension income.

Research from the Centre of Economic Business Research (Cebr), commissioned by more 2 life, suggests this situation is only going to exacerbate further. Its forecasts project that the amount of secured debt held by those aged 55+ will rise from £247bn to a massive £410bn in next 10 years, while unsecured debt will nearly triple from £48bn to £138bn in 2029.

As a result, the lending market for older people is predicted to almost double over the next decade – a trend that is already supported by Moneyfacts’ own research, which has identified an increase in equity release products from 117 to 300 in the last year alone. This is evidence of how keen the equity release market is to make the most of finding solutions for these types of consumers who need a lifeline.

Independent advice

Will Hale, CEO at Key, said: “Juggling debt at any age can be stressful but with typically a fixed income, older people are likely to find it even more stressful than most. Clearly people in their 70s and 80s are having to balance how to keep up these repayments alongside maintaining their standard of living in retirement.

“For homeowners, it makes sense to look at downsizing, equity release or other later life lending options to clear their debts and set them up for a more comfortable and less stressful retirement. Good independent expert advice is key to ensuring that older homeowners receive the most benefit from their property wealth and use it in the most appropriate way for them and their families.”

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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