Originations exceeding 35 years now account for 11% of new lending, a nearly fourfold increase from pre-2022 levels. The driver is straightforward: spreading a £300,000 balance over 40 years rather than 25 can reduce monthly repayments by roughly 15% to 25%, providing short-term affordability in a market shaped by elevated interest rates and stretched loan-to-income ratios. The trade-off is a slower drawdown of principal and, for a growing cohort of borrowers, a loan that runs well into their 60s and 70s.

The structural issue crystallises at renewal. When a fixed-rate deal expires and the remaining term extends past state pension age, lenders shift their income assessment framework. Payslips and business accounts give way to verified post-retirement income: state pension projections, private pension drawdown schedules, annuity statements and investment returns. Lenders must satisfy themselves that post-retirement cashflows comfortably service the outstanding balance.

Age caps compound the challenge. Most standard residential lenders require loans to be cleared by 70, 75 or 80. A borrower remortgaging in their late 50s may find the maximum permissible term compressed to meet that ceiling, raising monthly repayments at precisely the moment income is transitioning from salary to pension.

John Fraser-Tucker , head of mortgages at Mojo Mortgages , pointed to the standard variable rate risk as a specific pressure point. “For borrowers whose loan terms run into their 60s or 70s, understanding how mortgage renewals work as retirement approaches is crucial for ensuring smooth transitions between fixed terms,” he said. Allowing a fixed deal to lapse on to an SVR, which typically carries a meaningfully higher rate, can create payment volatility that fixed retirement income is poorly positioned to absorb.

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