A significant number of homeowners over the age of 55 are braced for major increases to their monthly mortgage payments as their fixed rate deals come to an end, new research by Key Later Life Finance has indicated.

The equity release adviser found that 47% of over-55s with mortgages expect monthly repayments to rise by an average £400 a month, which would equate to £4,800 a year.

Key’s research, based on 1,000 people over the age of 55, also suggested that three in 10 (30%) respondents were unsure about what would happen to their monthly payments.

The looming mortgage crunch has left 13% of over-55s worried they will slip into arrears on their mortgage as they head towards their retirement. Recent data from Moneyfacts revealed that the best rates for two-year and three-year fixed rate mortgages are 4.54% and 4.49%, respectively, at a time many over-55s are remortgaging from deals at 2% or even lower.

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

“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.”

Key’s research suggested that over-55s are paying an average £700 a month with mortgage repayments accounting for around 20% of their monthly outgoings, highlighting the financial pressure older homeowners are facing amid the cost of living crisis.

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

The equity release lender also said its research shows that some over-55s are taking action to limit increases if they can – with one in five having taken advice on reducing their mortgage repayments, and one in four speaking to their current lender.

Bibby added: “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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