Over a million people have taken out a new mortgage that will run past state pension age in the past three years, a freedom of information request from LCP has revealed.

The data, which was based on mortgage data supplied by the Financial Conduct Authority to the Bank of England, showed that those under 40 are the fastest growing group of people taking out mortgages lasting into retirement, many of whom are first-time-buyers.

Indeed, the data revealed a 29 per cent increase in the absolute number of people in their 30s taking out new mortgages that run on past pension age, which LCP suggested is likely in response to the unaffordability of house purchase for many younger people.

In addition to this, separate information supplied by the Bank of England showed that just under a quarter (23 per cent) of new mortgages to people in their thirties ran past pension age, but now it is just under two fifths (39 per cent).

Whilst LCP acknowledged that a mortgage taken out in someone’s thirties is highly unlikely to be someone’s last mortgage, it argued that the risk to retirement depends on what happens over the course of their working life and whether or not they are able to shorten the term.

In particular, LCP raised concerns that those who have mortgage debt at retirement may use their modest auto enrolment pension pots to clear the debt, leaving little for retirement itself and jeopardising their later life standard of living.

It also noted that whilst in the past people could spend their final years in work boosting their pension pot, having mostly paid off their mortgages, current and future savers may be deprived of a period pre-retirement when they might have paid off their mortgage.

Furthermore, LCP argued that mortgage lenders can have little certainty as to the future pension income of someone in their thirties today, and therefore cannot know if borrowers will have enough income in retirement to service a mortgage debt.

The firm also pointed out that growing numbers of people have dropped out of the labour market before reaching pension age, putting extra pressure on the need to keep up payments on a long-term outstanding mortgage.

Commenting on the findings, LCP partner, Steve Webb, said: “The huge number of mortgages which run past state pension age is shocking.

"The challenge of getting on the housing ladder is forcing large numbers of young home buyers to gamble with their retirement prospects by taking on ultra-long mortgages.

“We already know that millions of people are not saving enough for their retirement and if some of that limited retirement saving has to be used to clear a mortgage balance at retirement they will be at even greater risk of poverty in old age.

"Serious questions need to be asked of mortgage lenders as to whether this lending is really in the borrower’s best interests”.

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