Cost-of-Living Crisis: The Plight of Older Homeowners

Today, a large number of homeowners are battling the rising tide of expenses. How is the cost-of-living crisis affecting those on the brink of retirement or already in their twilight years?

Key Findings: The Impact on Homeowners Aged 50-70

Recent research by LiveMore shines a light on the financial distress many homeowners between the ages of 50 and 70 are currently facing:

  • 19% are significantly affected and uncertain about managing their future costs.
  • 59% have felt a mild impact.
  • 19% acknowledge the rising costs but believe they can handle it for now.
  • A fortunate 3% haven’t felt the sting of this crisis at all.

The Financial Burden on Older Homeowners

Leon Diamond, the founder and chief executive of LiveMore, paints a vivid picture of the struggles faced by many older individuals. While those without mortgages have one less monthly payment to worry about, many are deeply concerned about affording everyday necessities like bills, heating, and food.

Adding salt to the wound, the recent spike in interest rates makes maintaining a mortgage even more challenging. Diamond revealed a concerning fact: a mere 9% of surveyed homeowners haven’t had to make financial sacrifices. The majority have been forced to cut back on dining out, energy usage, vacations, savings, and even supporting their families.

Paths to Financial Security for the Elderly

While the situation might seem grim, there are avenues for older homeowners to find financial relief. Diamond highlights a prevalent misconception: many elderly individuals believe they aren’t eligible for mortgages. In fact, last year’s research showed only 4% of those aged between 50 and 90 thought they could apply for one, and this figure drops to 2% for those over 80.

Debunking myths, Diamond stresses that homeowners aged 50 to 90+ have more financial tools at their disposal than just equity release. Many in this age group have significant equity in their homes, making them “asset rich but cash poor”. Leveraging this equity can pave the way for a better quality of life. Income sources like pensions can back interest-only mortgages or even full capital and repayment products.

Furthermore, Diamond suggests a lifetime mortgage as another potential solution. He emphasizes the importance of comprehensive affordability assessments to tailor mortgage options to individual needs.

The Call to the Housing Industry

Diamond argues that catering to the 50 to 90+ age bracket shouldn’t be a niche in the mortgage industry but a significant focus. Given the undeniable trend of an aging population, he sees this sector’s growth as inevitable.

He poses a critical question: If professionals in the housing sector aren’t educated about mortgages for older people, how can they expect their clients to be? Diamond believes that proper education is paramount. By equipping both advisers and consumers with the right knowledge, the mortgage industry can indeed be a beacon of hope and relief for many.

In conclusion, while the cost-of-living crisis poses substantial challenges, with awareness, education, and the right financial tools, older homeowners can navigate these turbulent waters.