Blog Stretch, Flex and Release: The changing shape of Later Life Lending

First-time buyers are entering the market later than previous generations and borrowing over longer terms in order to become homeowners. At the other end of the mortgage continuum, more are still taking out new mortgages later in life, not only for traditional "later life" equity release products but also mainstream mortgages, reflecting our longer working lives and for wider financial planning.

In this Trends in the Economy and Lending (TEAL) report, we explore how these shifts in age, mortgage terms and borrowing behaviours are reshaping the route to homeownership, as persisting affordability pressures, as well as wider household financial considerations, alter the reality of owning a property outright.

This analysis comes at a pivotal moment for the sector. Following the publication of the Financial Conduct Authority's market study into later life mortgages, we offer some essential background context as to why - and how - more consumers are carrying mortgage debt into their later years.

Ageing First-time buyers and the 'Term stretch'

Chart 1 (source UK Finance) shows the impact of worsening affordability on First-Time buyers (FTBs) over the last decade. Since 2014, we have seen a gradual but consistent increase in both the average age of buyers and the length of their mortgage terms as they need to not only save for longer to enter the market but also then continue to borrow for longer.

While the average age of FTBs has climbed steadily, by far the stronger shift is in the average mortgage term. Many borrowers are choosing to stretch their terms over a longer period in order to lower their initial mortgage payments, which also allows them to borrow more against their income.

The proportion of FTBs taking out mortgage terms of over 35 years, and in many cases up to the maximum 40 years, has grown significantly since interest rates began to rise in 2022 (chart 2, source UK Finance), increasing the monthly cost of mortgage borrowing. This shift is primarily driven by customers using this term stretch to increase their borrowing capacity in the face of these higher rates.

Borrowing beyond retirement

As the average age of a first-time buyer approaches 33 and many borrowing for well beyond 30 years, a growing percentage now have mortgage terms that will take them well into their 60s. In fact, with most other options no longer possible under FCA lending rules, pushing the end of mortgage term into retirement has now become the primary means of stretching affordability.

With mortgage terms lengthening and an ageing FTB population (Chart 3, source UK Finance), shows the make-up of the increasing number of new mortgages that extend beyond planned retirement age. This trend raises questions around the long-term role of homeownership in financial resilience as mortgage debt extends further into later life.

Later life lending -not just equity release

In line with this shift, our data illustrates a robust mortgage market for older borrowers across all mortgage products (Chart 4, source UK Finance).

In Q4 2025 there were 41,100 new mortgages to customers aged 55 and above, of which 13,760 were for house purchase.

As Chart 5 (source UK Finance) highlights, the split between mainstream and specialist later-life products being used by borrowers aged 55 and over shifts noticeably as they grow older. Our analysis shows that later life lending represented 8% of all new residential lending and 22% of all new BTL lending in Q4 2025.

However, as the FCA explores the advice journey for older borrowers when choosing the most suitable product, our data highlights that a significant proportion of these consumers remain active in all areas of the mortgage market. Mainstream products account for the majority of activity among those in their late 50's, while the use of Lifetime and RIO mortgages increases steadily amongst the older cohorts, as accessing housing wealth becomes more relevant. Retirement Interest-Only (RIO) mortgages allow borrowers to make monthly interest payments until they move into long-term care, sell the home, or pass away, and only then will the loan be fully repaid.

Refinancing activity, however, represents the largest proportion of cases for customers aged 55 and above as a whole. This shows older homeowners are still proactively searching for better rates as they approach retirement, as well as using remortgage as a means of releasing equity to suit their needs, as the boundary between working life and retirement becomes more fluid.

Refinancing Behaviour

Reflecting the changing profile of later life borrowing, only one quarter of all later life customers are retired - and many borrowers are continuing to work beyond the traditional retirement age, supporting their ability to refinance and search for better rates. The FCA's recent market study, however, suggests this trend is shifting. With nearly half of the UK not saving enough for retirement, unlocking housing wealth is becoming a key component of funding households in their later years.

Chart 6 (source UK Finance) demonstrates a decline in the proportion of simple (pound-for-pound) remortgage and product transfer activity amongst older borrowers, likely due to the limited benefit of switching to a lower rate when the balance remaining is relatively small. At the same time, remortgaging to unlock equity rises in older cohorts, as in some cases this may be a more suitable way of releasing equity than taking a lifetime mortgage.

Summary

Overall, this complex evolving landscape points to a future in which more people are borrowing into retirement due to a combination of persistent affordability pressures and longer working lives. With FTBs entering the market later and working longer, many borrowers are continuing to carry mortgage debt well into their sixties. Yet this extended period of borrowing also reflects how homeowners are increasingly leveraging their housing wealth to support wider financial planning later in life.

The implications of this, however, are still unclear. For some, this extended mortgage journey offers flexibility - enabling homeowners to access their housing equity and smoothing the transition into retirement. For others, this shift highlights the importance of long-term financial resilience and the increasing role of housing wealth within this. At the same time this raises questions about the more limited options available to those without access to housing wealth as they move towards and into later life.

As borrowers shift from the traditional goal of owning outright, to managing and then leveraging debt that increasingly extends into retirement, UK Finance remains committed to using its data to inform the debate on how the market can best support the evolving landscape and sustainable homeownership through all stages of life.