Almost four out of five (79%) over-55s with fixed rate mortgages are concerned about being able to afford repayments once their current deal comes to an end, new research reveals.
Key Later Life Finance’s nationwide study of over-55s who have mortgages found 20% of respondents say they are ‘extremely concerned’ about their situation.
Key’s study – conducted before the latest Bank of England rate rise – found 23% of over-55s say they may have to return to work or work longer hours to afford a higher fixed rate deal.
Meanwhile, around 22% say they don’t think they can manage a rate of 6% plus.
Around one in five (20%) are worried they may go into arrears on their mortgage as a result of rate rises, while 21% say they haven’t dared think about their situation.
And 17% say they may have to downsize or sell their home to meet repayments.
The research reveals that for more than one in five (22%) – or around 316,000 households – the crunch will come within a year when their current deals run out.
With the Office of National Statistics suggesting most fixed rate deals ending in 2023 were set below 2%, borrowers are facing a big jump.
The research found 70% of over-55s are on fixed-rate mortgages with an average two years left to run on the deal.
Almost a quarter (23%) say they are confident they will be accepted for the best possible rate for their situation when their deal ends while 25% hope they will be.
Around 15% say they will go on to their lender’s Standard Variable Rate (SVR) and then look for a better rate, while 7% say they will be happy to just stay on the SVR.
Key chief executive Will Hale says: “Most over-55s with mortgages have been protected from the impact of the Bank of England’s series of rate rises as they have been on fixed rate deals with many paying less than 2%. Unfortunately, that era of low mortgage rates is over.
“Many older homeowners are now heading for steep increases in their monthly repayments and particularly given the continuing increases in other cost of living expenses, worries about being unable to afford higher rates are growing.
“Managing an increase of 5.65% when moving from one two-year fix rate mortgage to another or seeing an even larger 6.65% jump when you move to your lenders standard variable rate is understandably frightening.”
Hale says it is important to start thinking ahead of time rather than waiting until being forced to remortgage and pushed into a rushed decision.
He also recommends speaking to an adviser that specialises in later life lending products to understanding the different choices available.
