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Mortgage debt rises for pensioners

UK pensioners are carrying £98bn of mortgage debt into retirement which could be storing up a future timebomb, according to research from Key Retirement Solutions.

The equity-release specialist says one in four people in or nearing retirement could have an average of £31,000 per head of debt.

The analysis, based on more than 4,600 over-60s who released equity in their home in 2006, found that the average mortgage debt among people aged 60-64 years is £23,512, rising to £29,000 for the ages of 65-69.

This increases again with the over-70s owing £37,000 each with mortgage debt among the over-70s 27.5 per cent higher than in any other age group.

The findings come as the FSA is investigating concerns that too much mortgage debt is being carried into retirement with the findings of its probe expected towards the end of the second quarter of 2007.

KRS business development director Dean Mirfin says: “We are seeing increasing numbers of over-60s coming to us with mortgage debt that they are struggling to manage and looking for a way to ease the burden of debt in retirement.

“With the rising trend in higher levels of borrowing and fewer people saving for retirement, this could be a timebomb waiting to hit the next few generations of pensioners even harder than we are seeing now.

“This analysis is based upon from those who have released equity from their home but if these are only in part reflective of pensioners as a whole, it has to be of huge concern to us all.”

FSA spokesman Robin Gordon-Walker says: “We are gathering information to assess if the selling of mortgages into retirement gives rise to consumer detriment.”

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