Half of all mortgages aren’t paid off by the time the borrower reaches 65
There are lots of things going on in the world of real estate right now. In China, there are problems with overleveraged developers, and in many western countries, house prices are rising rapidly. New research now shows that half of mortgages are taken out by people who’ll still be paying them off as they reach retirement age. So what does that mean and why is it happening?
More than half of mortgage borrowers today will still be paying off their debt at age 65
Recent research has shown that 52% of all people applying for mortgages today will still be paying them off by the time they reach the age of 65. That might seem quite shocking, but it’s quickly becoming the norm.
The age of 65 is a significant number because, for now at least, that’s the age at which many people choose to retire. And in the past, most people have wanted to be debt free and have their mortgage paid off by the time they retire.
7 years ago, the figure was around a third
Imagen de Wayne Harrison en Pixabay
The statistic discussed above is notable because it’s new and marks a shift in how long it’s taking for people to pay off their mortgages. Back in 2014, just 7 years ago, only a third of people taking out mortgages were expected to still be paying them off by the time they reach the age of 65.
It’s a good idea for people to speak to mortgage brokers in order to find better deals that might be paid off a little sooner. But for some people, longer terms suit them for a variety of reasons, and that’s what we’re going to discuss next.
Longer mortgage terms are rising in popularity
There’s been a clear rise in the popularity of longer term mortgages in recent times. For many people, the choice isn’t much of a choice at all because they simply have to accept a longer term length in order to qualify for a mortgage.
Rising costs mean that lots of people are facing the prospect of being forced out of the housing market and becoming completely shut out. Slightly longer term lengths make it more realistic to buy a home.
An ageing population is playing a part in the rise
Another reason why longer mortgage terms are becoming more common and more popular is down to the fact that lots of people will be living longer than in the past now. And that means they should be earning money for longer.
As medicine and our health improves, more people will be happy to work a little longer and retire a little later, meaning paying the mortgage at 65 might not be such a problem.
Pension planning is now even more important
One thing all of this does mean however, is that pension planning is now more important than ever before. With the right approach, you might find that you can pay off your mortgage sooner and not be doing it when you’re 65.
