Research into Support for Mortgage Interest Claimants in Retirement

Research to investigate why people are increasingly taking mortgages into retirement and claiming Support for Mortgage Interest (SMI). The research aims to understand why people are taking their mortgages into retirement and why they are claiming SMI in doing so.

SMI is a payment that helps homeowners on some income related benefits with interest payments on their mortgage or loans that they have taken out for certain repairs and improvements. SMI is paid as part of the benefit and is normally paid direct to the lender. Increasing numbers of people are taking on mortgages which will last into retirement. In addition, many people now have interest-only mortgages, with the number of maturing interest-only mortgages projected to peak in 2032.

Taken together, these factors suggest that, in the future, an increasing number of Pension Credit claimants may rely on SMI to pay their mortgage interest, while having little or no ability to repay the capital sum during their retirement. This would cause an increase in SMI expenditure, which would be especially large if/when interest rates rise.

As such, the proposed research aims to understand why people are taking mortgages into retirement and why they are relying on SMI while doing so.

The research will consist of a literature review and a piece of qualitative research (with 51 individuals: either face to face or by telephone).

The lit review should be focused on GB & completed in advance of (so as to inform) the qualitative research. It may also include “grey literature” (i.e. unpublished info).

This will enable DWP to inform and develop an appropriate policy response and influence people’s decisions on taking mortgages into retirement.