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.

Despite the general assumption that older banking customers are more at risk of falling victim to fraud, GFT‘s latest ‘Banking Disruption Index’ has revealed that almost half (48 per cent) of 25 to 34-year-olds have, or know someone who has, been a victim of financial fraud, with fraudsters taking £570 from people on average.

The latest GFT Banking Disruption Index, a quarterly survey of consumer sentiment towards digital banking, has found that 22 per cent of victims had to wait up to two weeks to get their money back from their bank following fraud.

Despite the significant investment banks make to protect their customers from fraud, the data found that 34 per cent of 25 to 34-year-olds are concerned their bank’s security measures are not fit for purpose.

GFT also highlighted that only 24 per cent of those aged 55 and over have been a victim or know someone who has fallen foul of fraud, although only 14 per cent think their bank’s security measures are not fit for purpose.

Despite these findings, it remains clear that older generations are still susceptible to fraud, as those aged over 55 are losing the most money to fraud when it does happen, with fraudsters attempting to an average of £938 from them in each attack.

Banking customers are also concerned about the security of their banks – particularly following a rise in the number of emerging neobanks entering the market. The survey found that 40 per cent of consumers would trust a traditional bank more than a neobank to retrieve their money if they became a victim of fraud, whilst only eight per cent said they would trust a neobank over a traditional bank.

Banks battle for security

Richard Kalas, client solutions director of retail banking at GFT UK, said: “This data highlights the growing issue of fraud for younger banking customers, who are more willing to adopt new technology and share data.

“As banks continue to champion digital innovation, they must find a balance to ensure their customers feel protected with the least friction or intrusion.”

As banks look to reduce fraud levels, many are adopting new safety measures, such as location tracking to identify when a card is used in an unusual or different location to the customer, and instant spending alerts to notify customers when their card has been used.

However, banking customers are more worried about their privacy as 40 per cent of consumers would like the ability to opt out of participating in these security measures, according to the survey.

Simon Newton, principal security lead at GFT UK, also added: “The boom in digital banking and artificial intelligence can be seen as both a challenge for the banking sector as it catalyses increasing levels of fraud, as well as an opportunity for financial institutions to tackle it.

“Our research clearly demonstrates there is a greater need for education on the risks, as well as scope for increased security measures from banks.

“Applying AI and large data for payment screening is one way that could provide banks and customers with greater levels of identification and protection.”

Despite increasing economic pressures, as much as a quarter of savers never check their pensions; according to new research from Moneyhub, the award-winning data and payments platform built on open banking and open finance principles.

The Moneyhub research reveals a continuation of a lack of engagement that savers have with their pensions – a trend that has existed for years. In fact, 23 per cent of savers only check their pensions annually, with most of this proportion only falling into this category thanks to alerts about their pensions’ value in the provider’s annual statement.

Concerningly, this inertia surrounding pensions was found to be more prominent among those aged 55 and over, with 40 per cent saying they never check the value of their pension. A further 20 per cent only check the value once a year.

In comparison, younger generations are becoming more engaged with their pension, checking more regularly, likely thanks to the increasing ease of doing so through apps created by their pension providers. Forty-eight per cent of 16 to 24-year-olds and 47 per cent of 25 to 34-year-olds said they check their workplace pension at least once a month.

The findings highlight the important role that technology plays in encouraging engagement with our pensions. This is particularly important as increasing numbers express concern over whether they will have enough for a comfortable retirement and the cost of living drives some to reduce their pension contributions.

Moneyhub points to upcoming pensions dashboards as a key solution to solving the lack of engagement and savings shortfall within the UK. The Government Pensions Dashboard will enable people to find and view all their pensions including their state, workplace and personal pensions. Commercial pensions dashboards will find the same pensions, via the same central search mechanism, but crucially they will also let savers connect to other financial products they use, just like Standard Life’s Money Mindset app.

The power of the pension dashboard

Recently, Standard Life announced it is strengthening its partnership with Moneyhub with plans to deliver a commercial pensions dashboard. Moneyhub’s fully customisable white-label pensions dashboard will be embedded into Standard Life’s existing customer app, which incorporates a financial wellness tool, Money Mindset, which is also powered by Moneyhub’s Open Finance capabilities.

It already lets Standard Life’s members connect and see their bank accounts, credit cards, savings, ISAs, loans, mortgages, and property values next to their Standard Life pensions. Having access to a holistic view of their finances, allows people to make better long-term financial decisions and to support their short and long-term money goals.

Mark Horwood-James, MD of Moneyhub personal finance technology, commented: “There is evidently a clear need, and a want, from consumers to gain a better understanding of their pensions and more regularly check in with their expected retirement income. Only by staying engaged can you course-correct early enough to make a difference in your later years.

“However, it’s not simply enough to engage more with your pensions, we must look at our finances holistically. Open finance-powered solutions enable customers to better understand all their finances, create lasting savings habits, help switch to better products and find some of their lost pensions.

“In turn, this ensures they have the capacity to save more in their pensions and make better decisions when it comes to later-life savings. Pensions dashboards when combined with holistic money management tools are a true game changer for the industry and its customers, and at Moneyhub we’re ready to help both today.”