Grim reality of mortgage debt in retirement for ageing first-home buyers

First-home buyers across Sydney and NSW are staring down the barrel of a retirement crisis, with many facing the grim prospect of spending their golden years saddled with a mortgage.

That realisation comes as new research shows first-home buyers are getting older than ever before, because of escalating house prices, sluggish wage growth and the gruelling amount of time needed to save a deposit.

Westpac lending data has revealed one in five first-home buyer loans issued nationally over the year to July went to people over age 40.

The bank added that the average age of a first-home buyer across its network had risen to 34, up two years since 2020 – while broker networks put the figure higher at 34–37.

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New data reveals the average age of a first-home buyer had risen to 34

UNSW figures put the average first-home buyer age at 36.

The most popular mortgage across the lending market is 30 years.

Older first-home buyer ages have meant more people with debt closer to their retirement years.

THINGS WERE BETTER BACK IN THE DAY

Previous Australian Housing and Urban Research Institute (AHURI) research showed 54 per cent of 55-64-year-olds and 9 per cent over 65s still had mortgage debt in 2019, up from a respective 18 per cent and 4 per cent in 1996.

Housing experts said the numbers would be higher still today.

It’s a stark departure from previous decades. Back in 1981, the average age at which Aussies were paying off their home loans was 52. By 2015, it was 62 and rising.

These trends have followed warnings from housing experts that the recent expansion of the federal First Home Guarantee scheme may push first-home buyers into debt for longer.

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Natasha (32) is searching for her first home after seven years of renting. Picture: Tim Hunter.

WORTH THE COMMITMENT

Sydney-born Natasha is 32 and has been renting for seven years, in a combination of solo and share housing.

For the past 18 months she has been looking to buy her first property and said the thought of a mortgage is extremely daunting but also exciting.

“During Covid I had to move back into share housing because of the cost of living,” she said.

“I think a mortgage is daunting because it’s a massive commitment, a lot of money and it’s new territory, however, because I’ve been renting for so long I would rather put that money into a property of my own.”

Natasha said as she has moved five times in the last seven years, having a place to call her own is worth the commitment.

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Natasha (32) said having a place to call her own is worth the commitment. Picture: Tim Hunter.

“The reason I’m not afraid of purchasing my first home now and retiring with a mortgage is because I believe purchasing a property is getting your foot into the door of the property market,” she said.

“I see it as a long-term investment.”

A recent buyer aged 35, who wished to remain anonymous, said the search for a home was hard given the price and limited stock.

“Your borrowing money, it always weighs on your mind that potentially you wouldn’t be able to return or make the repayments,” the buyer said.

“There were a lot of thoughts and considerations that we had and it also took a bit of time for us to save up a bit more before we had a comfortable amount entering into a mortgage.”

Selling Agent Jordon Le Breux said there is an impression early to mid-20s would be first homebuyers but he has seen this shift.

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Jordon Le Breux

“I don’t see many younger people at home opens much anymore and if they are, they are with their families or parents who are looking to help them out,” he said.

“Over the last six to twelve months I haven’t seen many first homebuyers and if I do, they fit into that 30 to 35+ age range.”

Mr Le Breux said even in his own social circles there is a fear of a mortgages repayments lasting into retirement.

“I suppose that’s a common fear among younger people, that you buy one home and you’ll be stuck for a long time,” he said.

“I suppose people are aware now that they’ll be paying it off for life.”

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