First-home buyer data highlights emerging retirement crisis

Australia is preparing for a nation of homeowners still paying off mortgages in retirement, as people enter the market later and with a smaller deposit needed.

New Westpac data has revealed one in five first-homebuyer loans issued nationally over the past year were to buyers aged over 40.

The data also shows the age of the bank’s average first-home buyer is 34 – up almost two years what it was in 2020.

It shows the trend identified in a 2019 Australian Housing and Urban Research Institute report – where 54 per cent of those aged 55 to 64 were still paying off their mortgage – is continuing.

Westpac senior economist Matthew Hassan.

Westpac senior economist Matthew Hassan said recent first-home buyer incentives, including the expansion of the First Home Guarantee Scheme, would help some people buy sooner but would not substantially reform the market.

“We’re not expecting a big jump in overall borrowing beyond what rate cuts would already deliver,” Mr Hassan said.

“The expanded first home guarantee will make it easier to get a foot in the door by lowering the deposit hurdle, which is fantastic … (but) loan serviceability will remain a challenge for buyers.”

Daniel Gannon – Executive Director of the Retirement Living Council

Retirement Living Council executive director Daniel Gannon said the figures were “alarming”.

“Debt is following us into retirement, and it’s dragging people down,” Mr Gannon said.

“That debt doesn’t just strain the budget — it delays care, ramps up stress, and forces tough decisions about what is prioritised in retirement.”

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Blackfish Finance founder and mortgage broker Leah Busby said the number of people who would still be paying off their mortgage in retirement was extremely concerning.

“It has definitely increased and it’s emerging as a trend, I think more commonly than what people are actually even thinking about because a standard loan term is 30 years, so even someone that’s 40, which is young, is taking out a 30 year loan term which is going to see them to 70 if they don’t concentrate on their numbers,” she said.

“We definitely have a lot of clients that think they’ll just pay it off with their super, but the reality is the downside will be your lifestyle.

Blackfish Finance founder Leah Busby.

“Your super is meant to be your lifestyle so you’re not living on the minimum pension.

“So if clients aren’t thinking about that and they think, ‘oh well I’ll just use my super by the time I’m that age and clear it out to zero’, then you have nothing else to live on.

She said rather than feeling despondent, she encouraged househunters and mortgage holders to talk to a financial adviser to formulate a plan which would enable them to avoid this situation.

“It’s very confronting reviewing this and understanding your numbers, but it will lift a weight once you do have a plan in place.”

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Oaklands Park mortgage holder and aged care digital transformation manager Lynley Clark, 61, owns an investment property with her sister she is using to help pay off her mortgage.

Despite this, she said the fact that she still hasn’t paid her loan off was preventing her from retiring.

“I don’t think I can retire while I’ve got that mortgage hanging over my head,” she said.

“I don’t want to be living on just the pension.

Lynley Clark is one of many South Australians who face the daunting prospect of retiring with a mortgage. Picture: Tim Joy.

“If I have a mortgage when I retire I will have to use my superannuation to pay out my mortgage otherwise I don’t think it would be manageable, and I don’t want to do that.

“I feel stuck.

“But I’m one of the lucky ones. There are others in a much worse situation than I am.

“I’m just thankful that I’ve got really good financial advice on how to pay it off as quickly as possible, and I’d encourage others to seek out that advice too.”

– with Aidan Devine and Elizabeth Tilley.

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