Borrow and spend is over-55s habit

THE traditionally prudent older generation has been bitten by the borrowing bug, a report reveals today. Growing numbers of people over 55 are remortgaging their homes to finance day-to-day spending, according to a quarterly survey of retail financial services by accountant Ernst & Young.

Phil Middleton, the report's author, said the credit explosion is due to a shift in attitudes.

'The older generation was brought up to save in jam jars and to believe credit is a bad thing, but that has all changed.'

Poor stock market returns coupled with low interest rates have encouraged the over-55s to spend on credit rather than investing.

Anecdotal evidence also suggests that many are unconcerned about leaving an inheritance. Middleton added: 'There are people whose ideal is for their money to expire shortly after they do.'

A separate survey by the Prudential found that 700,000 people 65 and over have combined debts of more than £1.1bn. About 60,000 people in the 55 to 64 age group have individual debts of more than £50,000.

E&Y said there is no evidence so far that older people are borrowing recklessly or facing financial distress. But there are worries that pensioners may be less able to recover from debt problems than those of working age.

It added that levels of borrowing among the young have fallen over the past three months because first-time buyers are shying away from the housing market.

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