Retirement & Financial Planning Report

An increasing share of households with persons age 60 and older have mortgage debt than in the past but that is not necessarily a financial red flag, according to a report from the Center for Retirement Research.

A study found that those age 60 or more are now more than three times as likely to have mortgage debt than in 1980, an increase only partly attributable to an increase in home ownership rates at that age.


However, it found that increased mortgage usage “has coincided with less total debt among seniors relative to younger cohorts and has not resulted in increased delinquency. This may indicate that the negative aspects of increased mortgage usage are limited . . . given longer life expectancy and extended labor force participation rates of older workers, and improving health status, households may optimally choose to maintain mortgage debt later in life.”

It listed potentially good reasons to continue holding mortgage debt at those ages rather than, for example, selling the home, and then renting or purchasing a cheaper home with the proceeds. Such reasons may include the tax advantages of a mortgage; the desire to have a house to bequeath to survivors; and taking advantage of relatively low mortgage interest rates relative to the potential for growth in the home’s value, it said.

“It appears in recent years older homeowners have been holding on to their homes, extending the terms of their mortgages to potentially smooth consumption and access more liquid savings, or refinancing to access equity,” it said.