Over-55s fear mortgage plans have been ‘derailed’

Over-55s fear mortgage plans have been ‘derailed’

Almost one in three mortgage holders over the age of 55 fear that the cost of living crisis has impacted their ability to pay their mortgage.

According to research from equity release provider Key, 879,000 people’s mortgage plans have been “derailed” as a result of rising inflation and mortgage interest rates.

The results, based on data from 1,700 over-55s collected between April and November last year, showed that 40 per cent of this age cohort have already fully repaid their mortgage.

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However, of the 3.4mn over-55s who have not, 16 per cent said they plan to repay it in full before retirement but are concerned that the cost of living crisis will make it harder, while 13 per cent said it will take them longer.

Reality hit

Key collected data in both Q2 and Q4 last year in a bid to understand how attitudes changed over the year as the impact of the high inflation environment set in. 

It noted that the data showed a “growing realisation” among the over-55s that changes in the mortgage landscape would impact their plans, particularly after the “mini” Budget in September.

Mortgage Repayment Intentions

Q2 2022

Q4 2022

Cost of living crisis has impacted repayment plans



The current environment (i.e. rising cost of living) has had no main impact on my plans to repay my mortgage



I intend to repay my mortgage prior to retirement, and this has not changed



I still intend to repay my mortgage prior to retirement but I will find this harder



I still intend to repay my mortgage after I retire but may need to take longer



In Q2, 44 per cent of over-55s with mortgages said the current environment had no impact on their plans to repay their mortgage.

However, six months later this figure had fallen to 28 per cent as the impact of rising inflation and tightening affordability criteria set in.

Rising household bills also likely had an impact as more people began to doubt their ability to stick to their repayment targets.

Notably, the proportion of people who said they plan to repay their mortgage before retirement increased from 16 per cent to 19 per cent but Key said it is “entirely possible that some have chosen to delay finishing work to achieve this”.

Key chief executive, Will Hale said the results are “extremely worrying” and show that the cost of living crisis is no longer a short-term challenge, particularly for those who are older mortgage holders.

“With a larger proportion of their income being used for utilities and groceries – expenses which have been particularly hard hit by inflation – many over-55s are considering how they can cut back in other areas or even return to work in order to better manage their finances,” Hale said. 

He added: “However, some are already living extremely prudent lives so are likely to feel under increasing pressure to make ends meet.”

Back in December, FTAdviser reported that a rising number of older borrowers are using equity release as a way of supplementing their incomes amid the cost-of-living crisis.

Following September’s “mini” Budget, a significant number of equity release products were taken off the market as lenders reckoned with higher interest rates.