The total amount of both secured and unsecured debt owed by the over-55s will rise from £226bn in 2020 to £236bn this year, according to research by equity release lender, more2life, and economics consultancy, Cebr.

The study shows that 76 per cent of the overall debt level in 2021 will be driven by those aged 55-64, who are expected to borrow £180bn by the end of this year, a rise of £9bn since 2020.

Today’s figures contrast starkly with more2life’s research last year which suggested that debt among over-55s would fall to £207bn in 2021 as lack of consumer confidence caused people to delay purchases and tighten their belts.

However, with the economy recovering, confidence has returned, particularly in the housing market where demand – buoyed by the stamp duty holiday – is significantly higher than in pre-pandemic times.

The increase in debt expected over the next 18 months follows a period of financial uncertainty for many older households. Over a quarter (27 per cent) of over-55s say their general financial situation has worsened since March 2020 with the employed hit harder than the retired. Among part-time workers, 43 per cent said they had seen their financial circumstances worsen compared to 15 per cent who said their situation had improved.

This could be attributed to these individuals being put on furlough or seeing their wages cut. Figures from the Office for National Statistics reveal that over a quarter (28 per cent) of furloughed employees in the UK are aged 50 and over, and this cohort were more likely to report working fewer hours than usual because of Covid-19 between December 2020 and February 2021.

In contrast, 17 per cent of over-55s said their general financial situation had improved since the start of the pandemic.

Dave Harris, chief executive at more2life, said: “There’s no doubt that the events of the last 15 months have been both unexpected and challenging for most of us. And the older generations are no exception, with more than a quarter of over-55s saying they have seen their financial position deteriorate due to the pandemic.

“However, as our research shows, older customers are also relatively optimistic about the UK economy’s recovery, with discretionary and ‘big ticket’ spending set to rise. As a result, borrowing among over-55s is expected to increase to higher levels than previously forecasted.”