A total of 29,060 new loans were advanced to borrowers over the age of 55 in the final three months of 2023, a figure down 37.1% year-on-year, new UK Finance data has shown.

The value of this lending reached £4.1bn, which was down by 42.4% compared with Q4 the year before.

UK Finance’s figures latest also revealed that there were 6,710 new lifetime mortgages advanced in Q4, which was down 40.1% year-on-year. The value of this lending, at £520m, was down 57.4% compared with the same quarter in 2022.

The banking trade body also reported that 255 retirement interest-only mortgages were advanced in the quarter, also down significantly by 43.3% annually, with the value of this lending at £26m down year-on-year at 38.1%.

Residential later life loans in Q4 represented 7.38% of all residential loans, while buy-to-let (BTL) later life loans represented 21.98% of all BTL loans.

Head of personal finance at Hargreaves Lansdown, Sarah Coles, said that older borrowers are “ditching mortgages by the bucket-load”, thanks to higher interest rates.

“Hundreds of people are focusing intently on repaying the debt before they put their feet up, thousands are delaying equity release, and the number of older landlords snapping up new BTL loans has more than halved,” Coles commented.

“Higher house prices and more complicated personal lives have been driving more people to pay their mortgage later in life. It means that, all things being equal, we’d expect the numbers of retirees still paying the mortgage to be rising.

“Clearly, sky high mortgage rates have turned the tables, and persuaded people to double down on their efforts to repay their debts before retirement – to avoid entering their golden years weighed down by huge monthly repayments.”

Managing director of capital markets and finance at LiveMore, Simon Webb, added: “When we see these types of figures it rings alarm bells about the potential increasing number of mortgage prisoners in the UK.

“Interest-only mortgages can help mortgage prisoners who can’t meet affordability criteria as well as those with interest only mortgages due to mature but have no repayment plan in place. Without suitable products, these two groups of customers would otherwise have to sell up or pay very high interest rates.”

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