Late property purchases and relationship breakdowns are leaving borrowers without a clear exit strategy, says broker
About a third of Australians born between 1960 and 1985 expect to retire with outstanding mortgage debt, according to the Citro/AMP State of Gen X Australia report. A further quarter were unsure whether they would be debt-free by retirement.
The study, commissioned by Citro — an AMP-backed community rewards platform — found that rising living costs, mortgage stress, and caring responsibilities are leaving many in the cohort struggling, with seven in 10 now at risk of falling short of benchmarks for a comfortable retirement.
Krystal Jackson, a broker at Mortgage Choice, said these factors have reduced affordability and pushed many Gen X borrowers into the market later in life — often after relationship breakdowns that reset their financial position entirely.
"To get the same kind of house, they may have had to sell previously, they're paying hundreds of thousands more," Jackson (pictured right) said. "I see a lot of people that are separated. They thought they were set, they separate, all assets are sold, and they feel like they're starting again often in second marriages, new relationships, buying again later in life, with a new partner.
"In essence they're starting again. They felt like they were tracking well, and now they aren't, because often they've lost some super in the divorce settlement, and sold houses that they bought a lot cheaper. Now they're having to buy again at a much higher price, with a much larger mortgage."
The report also found many Gen X borrowers are purchasing smaller properties, limiting their ability to downsize and access equity in retirement.
On loan terms, Jackson said a 15-year mortgage would ideally clear debt before retirement for a borrower entering the market at 50, but current affordability makes that largely unworkable."Affordability doesn't allow for that," she stressed. "We still can do a 30-year loan term, but we have to really define the exit strategy."
While drawing on superannuation is one option, Jackson warned against using it solely to retire mortgage debt. "If they use their entire super to finalise their mortgage, then what's retirement look like for them?" she said.
Jackson recommends seeking financial advice early, with a long-term plan that balances debt reduction and super contributions. Salary sacrificing and transition-to-retirement arrangements can help accelerate progress.
"It needs to be a long game, and something that is worked on and thought about a lot earlier," she said.
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