Research embargoed by the Equity Release Council (ERC) for tomorrow shows the value of outstanding debt people project they will have when they retire.
Stephen Lowe, group external affairs and customer insight director at specialist retirement income provider Just Retirement, said:
"Just Retirement recently published findings from the largest study ever undertaken into consumer attitudes and usage of Housing Equity withdrawal and found similar evidence to that published by the ERC."
"Of those people at and approaching retirement significant numbers continue to have outstanding mortgage debt. What's concerning is 25% have no plans how to repay the debt and 1 in 4 expect to continue repaying the loan with their retirement income."
Data published in the FSA Mortgage Market Review consultation last year identified similar concerns.
FSA analysed 9,400 regulated mortgages with a term of five years taken out between April-September 2005
Of these 5,200 were interest only mortgages. All of these mortgages were due to be paid off by the end of October 2010
As at February 2011, a significant proportion of these mortgages had not been repaid (at least 37%) and had their terms extended
Where the term had been extended, 44% of the borrowers were over 65; 69% were over 60 and 87% had no specified repayment strategy
Stephen Lowe continues:
"With 1.5 million interest only mortgages worth around £120 billion due for repayment during the next ten years creative solutions from industry professionals and policy makers are required."
"Our research shows the baby boomer generation are far more disposed to using their housing assets to support their financial needs in retirement than previous generations. We are already seeing growing numbers turn to downsizing and equity release to provide solutions."
"The baby boomer generation are discovering the income they can expect in retirement is far below their expectations, falling short by on average £3,000 per year. For those carrying significant debt into retirement, repaying loans by using their property assets may be the only way of creating additional cashflow in retirement."
For more information on the research go to www.ERresearchcentre.org
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