Homebuyers are increasingly being forced to “gamble” with their retirement prospects to get on the housing ladder by taking on ultra-long mortgages lasting beyond the end of their working life, it has been claimed.

More than a million mortgages that stretch beyond the borrower’s state pension age have been arranged in the last three years, figures show.

The data, obtained via a freedom of information (FoI) request by the former Lib Dem pensions minister Steve Webb, show the proportion of home loans arranged to last into retirement increased from 31% in the final quarter of 2021 to 42% in the same period last year.

Among 30- to 39-year-olds, who would typically be expected to be taking out their first mortgage, 30,943 home loans were arranged to last beyond state pension age, with 39% of those granted in the last three months of 2023. This compared with 23% two years earlier.

The figures were higher for 40- to 49-year-olds, with 32,305 new mortgages, or 57% of the market, arranged beyond typical retirement age. In 2021 the proportion was 42%.

Older age groups were more likely to have home loans that stretched beyond retirement, but the numbers were far smaller.

Rising house prices and interest rates have fuelled an increase in the number of borrowers taking on ultra-long mortgage terms in recent years.

Arranging a mortgage over a longer period than the traditional 25 years reduces monthly repayments and in some cases means the difference between being able to afford a home and not.

Webb, a partner at the pension consultants LCP, submitted an FoI request to the Bank of England after it reported that two in five borrowers had taken out loans that would run beyond state pension age.

The Bank supplied figures for the final quarters of 2021, 2022 and 2023 showing all new residential mortgages issued in those periods. The figures include remortgages, so there could be some borrowers who took a two-year deal and then moved to a new loan in the same period, and so will be counted twice.

Webb said that if the figures for all quarters were similar, more than 1m mortgages that went beyond pension age had been issued, and this could cause problems when borrowers reached later life.

Although a mortgage taken out by someone in their 30s was unlikely to be their last, he said the risk to retirement depended on what happened over the course of their working life and whether or not they are able to shorten the term.

“The huge number of mortgages that run past state pension age is shocking,” he said. “The challenge of getting on the housing ladder is forcing large numbers of young homebuyers 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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