The cost of living crisis is having a long term effect with nearly a third of over-55s seeing an impact on their plans to pay off their mortgage.
New research from Key shows that of the 3.3 million over-55s who have yet to repay their mortgage, 16% plan to repay their mortgage ahead of retiring but believe the cost of living crisis will make it harder, while 13% expect it to take longer.
To track the ongoing impact of high inflation, the equity release adviser undertook research in both Q2 and Q4 2022. It showed a growing realisation amongst over-55s that changes in the mortgage landscape would impact their plans.
In the second quarter of 2022, 44% of over-55s said the current environment had no impact on their plans to repay their mortgage but by the fourth quarter, this had dropped to 28% as rising inflation, difficulty securing new/better deals and rising household bills saw more people rethink their ability to stick to their repayment ambitions.
Will Hale, CEO at Key, said the cost of living crisis was no longer a short-term challenge but one that will have longer term implications for many.
Hale said: “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.
“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.
“There is no doubt that many older customers are facing significant financial challenges, however, there are options available to help ease the pressure.”
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