Three in 10 (30%) of over-55s believe that their ability to repay their mortgage will be hindered as a result of the cost of living crisis, research from Key has indicated.

The equity release adviser estimated that this would equate to the mortgage plans of approximately 879,000 people being derailed. 

Of the 3.3 million over-55s in the UK who have yet to repay their mortgage, Key’s findings revealed that 16% say they plan to repay their mortgage ahead of retiring but the cost of living crisis will make it harder, while 13% said it will take them longer. Two in five (40%) of over-55s have already repaid their mortgage.

To track the ongoing impact of the current high inflationary environment, Key undertook this research in both Q2 2022 and Q4 2022. The adviser said that this highlighted a “growing realisation” among over-55s that changes in the mortgage landscape would impact their plans – especially following the volatility that followed the government’s mini-Budget in September.

Key’s findings showed that in Q2 2022, 44% of over-55s with mortgages said 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 limiting the ability to secure better deals, as well as rising household 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 Key highlighted that some have chosen to delay finishing work to achieve this.

Commenting on the findings, Key CEO, Will 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.

“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.

“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.”

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