Housing debt among near‑retirees has skyrocketed to record levels, reshaping what retirement looks like for a growing cohort of older home owners.
Housing debt for Australians in their late 50s and early 60s has ballooned over the past two decades, leaving a growing share of would‑be retirees servicing sizeable mortgages just as their incomes start to taper off.
Homesafe Wealth Release said the build‑up of mortgage balances among older owner‑occupiers was now colliding with higher interest rates and broader cost‑of‑living pressures.
The firm reported that Australians aged 55–64 were entering retirement with far more housing debt than earlier generations at the same age and that many were continuing to hold loans well into their 60s and 70s.
This shift marks a decisive break from the longstanding expectation that most people would own their homes outright by the time they left full‑time work.
Rate shock hits older borrowers
According to Homesafe, many borrowers in the age bracket took on or expanded loans when interest rates were at near historic lows – often extending loan terms, refinancing multiple times, or drawing on equity.
Yet as the cash rate has gradually crept up, those cheap‑debt assumptions have been shattered.
Citing recent Reserve Bank of Australia (RBA) analysis, Homesafe noted that borrowers who loaded up on debt in the low‑rate era had seen their regular repayments jump by around 50–70 per cent.
For older households with limited capacity to lift earnings, the company said the repayment shock was proving particularly challenging.
Homesafe Wealth Release CEO Dianne Shepherd said the organisation was dealing with more older home owners who were grappling with the prospect of reaching retirement without having cleared their housing loans.
“Many older Australians have exhausted their buffers and now they are facing rising interest rates and cost of living pressures as they enter retirement with a limited income,” Shepherd said.
She said the combination of higher borrowing costs and shrinking financial cushions was prompting a rethink of what retirement looked like for thousands of older households.
“We are entering an era where a debt free retirement cannot be assumed and is likely to be the exception. Older Australians need alternatives to manage debt commitments without needing to sell their home,” she said.
Asset‑rich households, thin cash flow
Homesafe pointed to Australian Bureau of Statistics (ABS) data that showed that mortgage balances for people aged 55–64 had more than tripled over the past 20 years, while the proportion of people approaching retirement with a home loan had doubled.
Shepherd said many clients fit the pattern of being comfortable on paper, yet struggling day‑to‑day due to the majority of their wealth being locked up in the home.
“A large proportion of older Australian home owners are asset-rich, but cash-poor,” Shepherd said.
She said the emotional toll was significant for those who expected to down tools with their mortgage long behind them.
“Their wealth sits in the family home, yet when they would like to retire many are still carrying housing debt and face ongoing financial pressure,” she said.
Shepherd said the cases emerging now involved borrowers who felt they had done everything right over several decades, yet were still being squeezed.
“They have worked hard, raised families, paid taxes for decades – and now they are facing the very real possibility of entering retirement with housing debt they simply can’t service,” she said.
Growing policy and product challenge
Homesafe said that the trend towards larger, longer‑lived mortgages among older Australians was fast becoming a major policy concern.
The company said longer life expectancy, the shift towards later home purchases, relationship breakdowns, and past equity withdrawals meant more people were carrying housing debt for longer.
It said the financial system needed to adapt to this reality through products and frameworks that allowed older home owners to manage mortgage obligations more sustainably.
“We’re entering a new era where a debt‑free retirement cannot be taken for granted. Older Australians need safe, reputable pathways to manage debt commitments, without sacrificing their financial stability or independence,” she said.
[Related: Older Australians under pressure as mortgages collide with rising costs]
