Sharp fall in number of mortgages for people in their 20s
Published 02/08/2014 | 02:30
THERE has been a sharp drop in the number of people in their 20s taking out mortgages.
Figures showing sales of mortgage protection policies indicate that there has been a 75pc fall in the number of people in their 20s buying this type of policy.
This is seen as a proxy for mortgages taken out.
An analysis conducted by protection provider Caledonian Life reveals that just 4pc of all mortgage protection policies last year were taken out by people in their 20s.
This is in stark contract to 10 years ago when almost a fifth of mortgage protection policies were taken out by the under-30- year-olds.
Lenders require homeloan borrowers to take out mortgage protection policies to pay off the debt if they die.
Joe Charles, of Caledonian Life, said the fall in mortgage protection policies being taken out by those in their 20s was down to them not taking out mortgages.
He said this was due to a lack of mortgage credit, banks seeking high deposits, and a chronic shortages of homes for sale.
Mortgage experts said younger people were deterred from buying by unemployment, while many of them have emigrated.
The property crash, and the arrears and negative equity situations their parents find themselves in, may also have put some of them off buying in favour of renting.
Some 41pc of those taking out mortgage protection policies last year were between the ages of 30 and 39, with 34pc between the ages of 40 and 49.
Caledonian Life said many people in their 40s were only getting on the property ladder for the first time now.
There has been a big growth in the numbers between the ages of 50 and 59 taking out protection policies linked to mortgages.
Mr Charles added: "One could speculate that this is due to them snapping up some of the property available at reduced prices from the peak years of 2004 to2007.
"Or some of those who took early retirement packages, are using some of their lump sum to buy an investment property, as high rents are providing good income streams and so on."
He added that the cost of mortgage protection policies were at historic lows.
Many companies also have additional offers available now too, Mr Charles added.
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