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Over-55s Brace for Mortgage Crunch as Fixed Rates End

by | May 21, 2024

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  • Over-55s with mortgages face paying up to £5,000 more a year and nearly one in eight with mortgages fear slipping into arrears 
  • Retirement savers with mortgages face the dual challenge of boosting their pensions and paying their mortgage, Key warns
  • Key’s Payment Term Lifetime Mortgage (PTLTM)  and other new variants of later life mortgages offer increasing flexibility and options but specialist advice is essential

Nearly half of over-55s with mortgages are braced for major increases in their monthly payments as their current fixed rate deals end, new research for the UK’s leading equity release adviser Key Later Life Finance shows.

Its study found 47% of over-55s with mortgages expect monthly repayments to rise by an average £400 a month – nearly £5,000 a year – with nearly one in three (30%) unsure what will happen to their monthly payments.

The looming mortgage crunch has left nearly one in eight (13%) worried they will slip into arrears on their mortgage as they head for retirement. Currently the best rates for two-year and three-year fixed rate mortgages are 4.54% and 4.49% respectively with many over-55s remortgaging from deals at around 2% or even lower.


Key has recently launched its Payment Term Lifetime Mortgage specifically to support later life homeowners struggling to meet increased monthly mortgage repayments as fixed rate deals end. With the Payment Term Lifetime Mortgage allowing partial interest payments to better manage monthly borrowing costs.

Borrowers have to commit to a period of mandatory payments which last until the oldest applicant’s 66th birthday but payments only have to be partial monthly interest payments making the monthly cost more affordable than a standard residential mortgage or a retirement interest only mortgage.

Other recently launched options include the Interest Reward Lifetime Mortgage, a new type of equity release product which rewards customers with lower interest rates when they commit to making repayments. This can have significant impact on the total cost of borrowing versus a standard lifetime mortgage. 


All of these options show the growing range of choices for over 55 homeowners that deliver different solutions versus trying to remortgage or reverting to their lenders standard variable rate (SVR) but seeking specialist advice is essential. Key later Life Finance have already updated their advice approach to cover the full range of later life product options. 

Key’s research shows growing interest in the wider range of options – 44% of over-55s homeowners say they are completely or very aware of later life lending options and 36% say they are interested in PLTMs with 6% very interested.

Over-55s mortgage crunch


Key’s research shows on average over-55s are paying £700 month with mortgage repayments accounting for around 20% of their monthly outgoings underlining the financial pressure older homeowners are under from the cost-of-living crisis as they try to juggle bills with saving for retirement.

Around one in seven (15%) however say mortgage repayments currently account for 30% or more of their monthly outgoings and 11% say their monthly repayments total £1,500 or more.

The research shows over-55s are taking action to limit increases if they can – one in five have taken advice on reducing their mortgage repayments and one in four have spoken to their current lender.


It found many over-55s are making major financial sacrifices to pay off their mortgages before they retire even if they are not worried about rates rising – 57% expecting to pay their home loans have made cutbacks and are most likely to have cut spending in general while 18% say they have worked for longer than they planned.

Chris Bibby, Managing Director at Key, said: “Over-55s homeowners at the end of fixed rate deals are facing substantial increases which will have a major impact on their finances. 

“Our research shows average increases will be around £400 a month and when homeowners are already spending 20% of their income on mortgage repayments that will make a big difference to budgeting particularly for people who are also trying to prioritise pension savings. For many it will be impossible and something will have to give.


“The later life lending market is evolving rapidly, so over 55s should seek specialist advice to be able to look at the burgeoning number of product options available. There are options that may not be part of a mainstream lenders portfolio that could provide a better outcome for many.”

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