Mortgage debt time-bomb for pensioners

London, Mar 28: A quarter of people in or nearing retirement have mortgage debts worth thousands of pounds, a report shows.

They owe on average 31,000 pounds, according to a poll by equity release specialist Key Retirement Solutions.

The analysis, based on more than 4,620 over-60s who released equity in their home in 2006, found that the over-70s had the highest level of mortgage debt.

They owe an average of around 37,100 pounds to their mortgage lender.

That compares to 29,300 pounds among those aged 65-69, and 23,500 pounds among those aged 60-64.

Dean Mirfin, business development director at Key Retirement Solutions, said the problem was set to worsen for future generations.

''We are seeing increasing numbers of over-60s coming to us with mortgage debt that they are struggling to manage and looking for a way to ease the burden of debt in retirement.

''With the rising trend in higher levels of borrowing, and fewer people saving for retirement, this could be a time-bomb waiting to hit the next few generations of pensioners even harder than we're seeing now.

''Whilst this analysis is based upon those who have released equity from their home, if these are only in part reflective of pensioners as a whole, it has to be of huge concern to us all.'' Chris Tapp, associate director of charity Credit Action, said the findings highlighted the ''very difficult situation a sizable number of pensioners find themselves in'' trying to cope with debt repayments as well as rising living costs.

''We are also concerned that this is a trend which is only likely to get worse as we see people borrowing more, borrowing for longer and saving less in a desperate attempt to get a foot onto the housing ladder,'' Tapp added.

Recent Credit Action statistics show that 1.4 million pensioners live on an annual income of 5,000 pounds or less.

This leaves just 257 pounds per month, after council tax and utility bills are paid.

Servicing outstanding mortgage debt costs an average of 215 pounds per month leaving the most vulnerable with just 42 pounds to live on.

Reuters