Buy To Let lending for older landlords falls off a cliff

New figures from lenders trade body UK Finance show a massive fall in buy to let loans for those aged 55 or over.

In the last three months of 2023 there were just 7,980 buy to let loans or remortgages from the 55-plus investors, down 52.86 per cent.

“New buy to let mortgages have fallen off a cliff among older landlords, with the number of these loans halving in a year. Given that older people make up more than a fifth of all buy to let loans, this has a wider effect on the broader market” warns Sarah Coles of business consultancy Hargreaves Lansdown.

“As more older people decide that being a private landlord isn’t as rewarding or as tax-efficient as they had hoped, it means they’re selling up, which puts more pressure on rising rents again” she adds.

The buy to let mortgage slump is just one aspect of how older borrowers have sat on their hands recently.

There were only 29,060 new mortgages taken out by older borrowers over 55 in the last three months of 2023 - down 37.1 per cent in a year.

Some 13,160 of these borrowers were in work, and 1,000 retired. The number of retired people with mortgages is down 30.56 per cent in a year.

Around half of new mortgages for the over 55s were for house purchases or remortgages (14,625) – down 20.95 per cent in a year.

And 6,710 of them were new lifetime mortgages (equity release) – down 40.14 per cent.

There were 255 retirement interest-only mortgages – down 43.3 per cent in a year - and 7,980 were buy-to-let loans or remortgages, down 52.86 per cent.

Coles continues: “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 buy to let loans has more than halved.

“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. The number of retired people with new mortgages is down almost a third in a year.

“If people are repaying their mortgage alongside making generous pension contributions, there isn’t anything wrong with this. The concern is that some will have compromised on pensions, stocks and shares ISAs and savings in order to maximise mortgage repayments.”