Its analysis of households in England and Wales shows 18% of owner occupiers aged 55+ have still to clear their mortgages pointing to a growing risk of people carrying substantial debts into retirement.
The research shows 289,000 of 4.34 million households in the 65+ age group – equivalent to 6% of all households - are still paying mortgage while among the 55 to 64-years-old age group around 37% of the 2.77 million households have still to pay off their mortgages.
The analysis comes after separate research from ratings agency Moodys estimated that around 52,000 borrowers aged 60+ have interest-only mortgages and equity in their house of less than 20%.
More 2 Life believes there needs to a greater focus on solutions for people in retirement who owe money on mortgages and offers its own Interest Choice Plan which enables borrowers to switch to an equity release lifetime mortgage at 6.08%.
Its own data shows more than four out of five customers taking out the plan use the money released to clear mortgage balances ahead of the fixed repayment date and switch to a lifetime mortgage without a fixed repayment date.
It is urging the Financial Services Authority – which is due to publish comprehensive research on the interest-only issue at the end of March – to force lenders to issue warning letters to customers modeled on the endowments scheme of Red, Amber and Green letters.
Jon King, Managing Director of More 2 Life, said:
“There clearly is a potential mortgage time-bomb with homeowners paying off loans way past traditional retirement dates.
“For many that it is not an issue but for substantial numbers on interest-only deals there is a looming repayment date when they will have to repay the money they have borrowed.
“The worry is that many are just hoping for the best which is why regular warning letters from lenders will help concentrate customers’ minds. Lenders themselves already acknowledge it is a major issue and many are concerned.”
