The UK’s rising mortgage burden is a “major threat” to over 55s looking to plan for later life, according to Key Advice.
Its analysis showed that average earners buying houses in the past two years now face the highest mortgage burden since the 2008 financial crisis, spending nearly 50 per cent of their monthly income on repayments.
This data highlighted how average wages have lagged significantly behind house prices, with wages increasing by 237 per cent since 2000 while house prices have risen by 345 per cent.
Consequently, Key is urging mortgage advisers to expand the solutions they offer to customers over 55s to include later life lending products or to agree referral deals with later life lending specialists who can provide advice on the range of products.
Rachel East, senior director at Key Advice, said: “The UK’s rising mortgage burden which is resulting in borrowers on average earnings spending the highest proportion of their monthly income on mortgage repayments since 2008 shows the need for innovation in both products and advice.
“Mainstream mortgage advisers need to widen the options they offer to older customers or work with later life lending specialists who can do so.
“Irrespective of scope of advice limitations, consumer duty obligations require advisers to have comprehensive conversations and make customers aware of all the options available to help them achieve a good outcome.”
She explained that older customers should not be worrying about their mortgage burden rising when there are innovative products available to relieve the pressure and which offer flexibility around repayments.
“Mainstream mortgage advisers, and wealth/investment advisers, need to recognise the innovation that has taken place in the lifetime mortgage sector and ensure that all options are considered when dealing with older customers.”
Additionally, Key’s own research showed that 24 per cent of over 55s homeowners with a mortgage expect to be still repaying home loans once they have retired from full-time work.
It believes over 55s homeowners coming to the end of fixed-term mortgage deals particularly need support in coping with the UK’s rising mortgage burden with average repayments taking up a bigger proportion of monthly pay.
This is reflected by Equity Release Council figures showing 48 per cent of later life lending borrowers are aged 55 to 60, and more than 73 per cent are aged 55 to 65.
tom.dunstan@ft.com
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