UK over-55s are expected to borrow £10bn more in 2021 as consumer confidence returns to the economy, according to new research from equity release lender, more2life, and economics consultancy, Cebr.

The findings suggested that the total amount of both secured and unsecured debt owed by the over-55s will rise from £226bn in 2020, to £236bn this year.

more2life said the increase is expected due to optimism among older generations as the UK’s economy slowly recovers from the COVID-19 pandemic, and as spending on “big ticket” items such as mortgages and home renovations return

The research also revealed that 76% of the overall debt level in 2021 will be driven by those between the ages of 55 and 64, who are expected to borrow £180bn by the end of this year – a rise of £9bn since 2020.

more2life chief executive officer, Dave Harris, commented: “There’s no doubt that the events of the last 15 months have been both unexpected and challenging for most of us. The older generations are no exception, with more than a quarter of over-55s saying they have seen their financial position deteriorate due to the pandemic.

“However, as our research shows, older customers are also relatively optimistic about the UK economy’s recovery, with discretionary and ‘big ticket’ spending set to rise. As a result, borrowing among over-55s is expected to increase to higher levels than previously forecasted.”

The findings, based on 1,016 responses from individuals over the age of 55, also suggested that the level of unsecured debt – such as credit card debt and bank loans – is set to rise by 1% this year.

However, while the growth in this type of borrowing in 2021 is expected to be relatively modest, the forecasts show that by the end of 2022 these levels will have risen by a further 10% as older generations navigate the fallout of the crisis and turn to short-term forms of debt for support.

In total, over-55s will owe almost £20m in unsecured debt next year, with £4m of this borrowing in the form of credit card debt.

Harris highlighted that with the potential for this borrowing to grow to “unmanageable levels”, it is important that over-55s are made aware of all of their options.

He added: “There are a range of products on offer in the later life lending market, meaning that consumers with varying needs can find an approach that enables them to manage their borrowing and enjoy a more comfortable retirement.

“However, it’s crucial they seek advice that helps them to make the right choice for their unique circumstance, whether this involves equity release or an alternative solution.”

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