Retirees Draw Down Super to Pay Mortgages
Rising interest rates and falling house prices are pushing older Australians with home loans to use their retirement savings.
Updated on Nov. 13, 2026 in Residential
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Older Australians are running down superannuation to pay off home loans as interest rates have risen five times, with mortgage rates close to 7%. House prices are down 7% from their recent peak, reducing home equity for retirees.
Why it matters
Mortgage repayments are the largest expense for older mortgagors, taking up one-third of their budgets. Falling home equity and rising rent assistance demand suggest the strain on retirees in Australia may grow.
Around 243,000 Australians aged 60 to 65 still hold a mortgage, and the median age at which people paid off their home rose from 52 in 1981 to 62 in 2016. Homesafe Wealth Release inquiries rose 25% with each interest rate increase, though the total number of retirees affected is not stated.
The details
Some older mortgagors are using superannuation to bolster home equity, while others are selling their homes and moving into rentals to escape repayments. Retirees are paying higher mortgage interest from retirement income as rates climb.
Timeline
1981: median age of home payoff was 52.
2008: interest rates last reached their current highest level.
2016: median age of home payoff reached 62.
2031: projected Commonwealth Rent Assistance recipients reach 664,000.
Roadmap
Projected demand for Commonwealth Rent Assistance is set to rise 60%, from 414,000 people in 2016 to 664,000 in 2031. The current squeeze on older mortgagors suggests that a growing share of this demand could come from retirees who have sold up or lost home equity.
Older homeowners still paying off a mortgage face repayments that can consume a third of their budget, and those with falling home equity have fewer options if they need to sell or borrow. Renters and those considering downsizing should factor in the projected rise in rent assistance demand when planning for retirement.
The takeaway
Retirees weighing whether to draw on superannuation to clear a mortgage should compare the cost of ongoing interest against the value of their retirement income. Reviewing repayment options with a financial adviser before rates rise further can help protect long-term security.
Further reading
For more on the housing market shaping these decisions, see Residential property news in Australia.
Source note: This article includes information reported by Stockhead.
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