Increasing interest and mortgage rates are driving financial anxiety for many across the UK. As much as 28 per cent of over-55s fear they couldn’t afford to repay their mortgage if it moved onto their lender’s Standard Variable Rate (SVR), new research from mortgage lender Perenna reveals.
Another 36 per cent would find it difficult to manage mortgage repayments, bringing the total who could struggle to 64 per cent and potentially putting many into financial distress, Perenna explained.
Because of this, later-life borrowers facing issues are often left to decide between selling or downsizing. Currently, 37 per cent are considering selling their homes to relocate or downsize. This rises to 48 per cent in London, where property prices are 34 per cent higher than the average property price in the UK.
Lenders usually place end-of-term age limit restrictions for older borrowers trying to secure a new mortgage or remortgage. As a result, 60 per cent believe there is a lack of choice and financial products tailored to them, and 36 per cent find their mortgage restrictive because of their age profile, being fundamentally excluded from the mortgage market.
The situation also raises concerns about an increase in financial exclusion. As life expectancies rise, the demand for mortgage products that cater to older demographics grows, with 18 per cent of respondents stating that mortgage repayments have restricted their ability to travel or engage in leisure activities.
A further 17 per cent report an impact on their financial stability and ability to support their family, while nine per cent have postponed retirement plans to pay off their mortgage.
Launching support
The research comes as Perenna launches its Retirement Interest Only (RIO) mortgage for those aged over 55 who want flexibility and optionality. As of 15 February 2024, it is currently a market-leading long-term fixed rate RIO product, starting at 5.84 per cent (up to a maximum 60 per cent LTV).
Arjan Verbeek, CEO and co-founder of Perenna, said: “The current UK mortgage market is ageist. A whole demographic is being unfairly excluded and left behind, because of their age. We think that is wrong.
“The lack of options available for people over 55, underpinned by a fear of being trapped in their provider’s SVR, is putting many in financial distress. This shouldn’t be the case. Retirees should have solutions available to live the lives they desire and deserve. Our new long-term fixed rate retirement interest-only mortgage is a step towards financial freedom for older homeowners.”
Perenna’s new RIO product includes all the benefits that long-term fixed-rate mortgages offer; in an effort to give homeowners peace of mind.
