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Almost one in three over-55s with a mortgage admit cost of living crisis has impacted repayment plans

11 January 2023

Latest tracking research from the UK’s largest equity release adviser Key highlights that 30% of over 55s believe that their ability to repay their mortgage will be hindered due the cost-of-living crisis, equating to around 879,000* people’s mortgage plans being derailed. 

  Total 55-64 65-74 Over-75*
No. over-55s homeowners with outstanding mortgages 3,399,743 2,114,321 744,411 224,829
% who believe Cost of living crisis will impact their plans 30% 34% 16% 17%
Total Impacted 879,545 724,910 117,539 37,097

Of those 3.3 million over-55s who have yet to repay their mortgage, 16% say they plan to repay their mortgage ahead of retiring but the cost-of-living crisis will make it harder while 13% say it will take them longer and 1% are worried about the performance of the investment they plan to use to repay their interest-only borrowing.

Two in five (40%) over-55s have already repaid their mortgage but 4% admit that they may need to borrow in the future to boost their retirement income and secure their standard of living.

Growing Challenge:
To track the ongoing impact of the current high inflationary environment, Key undertook this research in both Q2 2022 and Q4 2022.  This showed a growing realization amongst over-55s that changes in the mortgage landscape would impact their plans – especially following the volatility after the mini-budget in September.

Interestingly in Q2 2022, 44% of over-55s with mortgages said that the current environment had no impact on their plans to repay their mortgage.  However in just six months, this had fallen to 28% as the impact of rising inflation, tightening affordability criteria and rising bills saw more people doubt their ability to stick to their repayment ambitions.

The proportion of people who intend to repay their mortgage ahead of retirement increased to 19% but it is entirely possible that some have chosen to delay finishing work to achieve this.  We’ve also seen a 5% increase in the number who say that they will repay their mortgage prior to retirement but will find this harder.
Mortgage Repayment Intentions Q2 2022 Q4 2022
Cost of living crisis has impacted repayment plans 27% 30%
The current environment (i.e. rising cost of living) has had no main impact on my plans to repay my mortgage 44% 28%
I intend to repay my mortgage prior to retirement, and this has not changed 16% 19%
I still intend to repay my mortgage prior to retirement but I will find this harder 11% 16%
I still intend to repay my mortgage after I retire but may need to take longer 9% 13%

Will Hale, CEO at Key, the UK’s largest equity release adviser, 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 juggle not only day-to-day priorities but the need to save enough to enjoy 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 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.

“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 make ad hoc interest as well as capital repayments and early repayment charges which start from five years, older borrowers can reduce their outgoings while still managing their borrowering.”

Page last updated: Wednesday 11 January 2023