According to the latest research from equity release adviser Key, more than 879,000 people aged 55 or over with a mortgage have had their plans derailed by the current crisis.
Of those 3.3 million over-55s who have yet to repay their mortgage, 16 per cent say they plan to repay their mortgage ahead of retiring but the cost of living crisis will make it harder while 13 per cent per cent say it will take them longer.
To track the ongoing impact of the current high inflationary environment, Key undertook its research of 1,700 over-55s in both Q2 2022 and Q4 2022.
In Q2 2022, 44 per cent of the cohort said that the current environment had no impact on their plans to repay their mortgage. However, just six months later, this had fallen to 28 per cent as the impact of rising inflation, tightening affordability criteria and rising household bills saw more people doubt their ability to stick to their repayment ambitions.
Key: Over-55s ‘under increasing pressure to make ends meet’
Will Hale, CEO at Key, said: “The cost of living crisis is no longer a short-term challenge but one that has far longer implications for many – especially those who are older and looking to pay off their mortgage. It is extremely worrying that almost 900,000 over-55s are going to find it tougher to repay their borrowing as they work hard to deal with rising household bills alongside the need to save enough to be able to enjoy a secure and fulfilling retirement.
“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. However, some are already living extremely prudent lives so are likely to feel under increasing pressure to make ends meet.”
Hale noted that an equity release product could help some of those who find themselves hinder by the cost of living crisis. However, he noted that they should always take specialist advice before purchasing such a product.
He said: “While homeowners should always get specialist advice before they choose to access the equity in their homes, this option should be considered carefully – especially given the flexible nature of products like equity release. With the ability to serve interest and/or make ad hoc capital repayments, older borrowers can reduce their outgoings while still carefully managing their borrowing.
“Also, with fixed early repayment charges which can disappear completely in as little as five years on certain products, a lifetime mortgage no longer has to be a product for life. As circumstances change, for example off the back of an inheritance, customers may find themselves able to fully repay their equity release loan or alternatively remortgage to another product that may offer better rates or features than those available today.”
