Money blog: 'My anxiety levels are rocketing' - the mortgage chokehold facing old-age Britons (2024)

By Katie Williams, Money team

Many of us envisage retirement as a peaceful winding down after several decades of hard work.

But an increasing number of mortgage holders face having to put their relaxation on ice as they're left with no choice but to work past their pension age to pay off long-term mortgages.

Homeowners are still reeling from painful interest rate increases by the Bank of England (BoE) that pushed high street mortgage rates as high as 6.8%. Those who have taken out or renewed their mortgage in the past year have likely had their monthly payments rocket.

A recent BoE report revealed nearly half of all mortgages issued in the last three months of 2023 were for 30 years or longer, while two in five were issued to borrowers who would be past state pension age at the end of their mortgage term.

Different figures from UK Finance show 41,580 first-time buyers took out mortgages with terms of 30 years or more in the last quarter of 2023, of which around 15,700 (38%) were longer than 35 years.

'I'll be paying until I'm 75'

One single homeowner from Hove, who asked not to give her name, said even though she had a "healthy deposit" for the flat she bought a year and a half ago, the mortgage was still a "big stretch" and she will be paying it off until she is 75.

"I can't get it down, I need to keep working," she said.

"When I'm older I will have no other source of guaranteed income other than company pension and state pension, they won't cover my mortgage and other expenses."

Stephen Eblet's mortgage is set to run until he is 68 - one year past his pension age. He says he has enough in his private pension to pay it off, but doing so will impact his finances in retirement.

The 62-year-old self-employed plumber, who lives in Gristhorpe, near Scarborough, suffers with musculoskeletal pain and is worried about "making the finish line" at 67, a retirement age he says is "far too high" for manual labourers.

"My anxiety levels are rocketing," he said. "I'm terribly worried about having to finish work early because of back problems and where that will leave me with a mortgage and how it will impact my lifestyle should I have to retire."

Inheritance, downsizing and interest rate falls - how Britons are planning to make their mortgages shorter

Taking out a long-term mortgage doesn't necessarily mean you're locked in.

There is the option to shorten the term at the end of your fixed-rate period or move to a less expensive home to cut off some of the debt.

This is the case for Danielle Steele, 39, from Swindon, who has a mortgage with her husband that is currently set to end when they are 71.

They plan to downsize once their two daughters leave home in around a decade or so, meaning they're not too concerned at this point.

Father-of-four David Clarkson, 41, who lives in Flintshire, said he and his wife recently opted for a mortgage that will take them to 75, with a rate fixed for three years. It kept his payments within £150 of what they were paying before.

He is hoping interest rates will drop in the next three to six years to allow them to pay it off in time.

"So far we've not had to change too many aspects of daily life, but this will change in the coming years if wages don't go up or prices continue to rise," he said.

Steve, 51, from Scotland, said his mortgage goes three years past his pension age - but it's a "calculated risk".

"We hope we'll get inheritance to pay off our mortgage sooner. Not that you want older relatives to die, but it seems a lot of people need to rely on that these days," he said.

Long-term means high interest

Gerard Boon, managing director of online mortgage broker Boon Brokers, says staff have seen a rise in clients reporting that they'll have to worker longer and later in life to settle their bills.

"We always ask how long people are willing to work. Five or six years ago or even just pre-COVID… people would normally say their retirement age [is] 66 or 67 years old and that was fairly standard. But now, more often than not, people are saying [they'll] have to work until 70 or maybe 75," he said.

He noted that some lenders have "cottoned on" to this fact and are raising the age cap on their mortgages as a result. Others remain more cautious, such as Halifax, which recently cut the cap from 75 to 70 years for some of its products.

Mr Boon said his advice to clients is always to opt for a shorter term if possible, as they will pay "far more" interest over the course of a longer-term deal - but for many it's just not feasible.

"I would say the vast majority of applications, especially for first-time buyers in the age range of 20 to 25, they've opted for the longest time period," he said.

"People are trying to get their costs down... I think a lot of people are taking these longer mortgage terms with the hopes that they'll be able to refinance at a later date to shorten the term."

What are lenders' rules around retirement age?

UK lenders will have age limits for mortgage lending - one being a cap on the maximum age you can take one out, and another for paying them off.

Different lenders will have different rules on what age they require the debt to be paid by.

The upper age limit for paying off a mortgage typically ranges between 70 and 85, while most will not let you enter a new deal past the age of 80.

Individual circ*mstances, such as income, employment status and credit history, will also affect eligibility as they would for any borrower.

Holidaymakers are being urged to avoid a car hire company ranked last in a customer satisfaction survey.

Goldcar, which operates in countries like Spain, Portugal, France and the US, achieved an overall score of 52% in the annual report by consumer group Which?

It was awarded two stars out of a possible five for value for money, car description matching reality, record given of damage to car, and customer service.

One fifth (20%) of respondents who used Goldcar said they had issues with the condition of the car, and 23% reported being charged extra either when they picked up or returned the car.

The car hire company with the second-lowest overall score was Dollar (56%), followed by Record Go (57%), Budget (61%) and Sixt (64%).

"Booking car hire should be straightforward, but all too often it feels like the wild west, with travellers lamenting fraught experiences, poor customer service and spurious fees," said Rory Boland, editor of magazine Which? Travel.

"Goldcar in particular is best avoided, with customers repeatedly reporting serious issues from pressure selling to poor customer service."

A spokesman for Goldcar, which is owned by Europcar Mobility Group, said: "Goldcar is of course disappointed about the results of the Which? report.

"The company takes customer care very seriously with a code of ethics for counter sales and a guide of good sales practices, both of which are reviewed annually based on customer feedback.

"We are committed to investigating any incidents where a customer believes they have received a service that does not match expectations for a low-cost brand and continue to invest in staff training and best practices."

Throughout the week, lots of our readers send in comments on the money stories that have caught their eye, and every Saturday we bring you a selection of them.

Our analysis of the best ways to make your holiday cash go further garnered some attention.

Experts explained the benefits of using plastic overseas, what type of cards are best to use and how to avoid a common mistake that can cause you to spend more.

They were also quizzed on when and where holidaymakers should get cash, and what exchange rates to look for.

Money blog readers said:

Instead of carrying cash, why not use a gift card instead?

And if you use the taxis or minicab, check the prices first. And why not get a weekly or monthly bus pass if you can?

Marc Ricketts

We used a Halifax clarity card on a recent holiday to Thailand. It's a great holiday card but it's a pain using it online.

They want a text confirmation - a problem if you're using a local sim. Card is locked and there's no way to unlock it without phoning home.

Gareth Rona

Ourcost of living specialist Megan Harwood-Baynes shared her experience of putting her home on Airbnb, making £700 from a spare room in two months.

But she advised prospective users of the app to make sure they have a good radar for vetting people.

Not everyone was convinced...

Before boasting about being an Airbnb host, people should know about the damage they do to local areas. Because of them rents keep going up. People who grew up locally are forced to move away.

Tissiam

The majority of leasehold flats don't allow short-term lets.

Why does the UK allow Airbnb to operate if they don't secure copies of leases to confirm leasehold properties have the permissions required for those hosts either unaware or too arrogant to comply with terms of leases?

Als

Pearl Jam fans were left upset after paying for tickets to see the band - only for the price to be cut in half less than two weeks before the show.

Readers took the opportunity to share their concerns about the industry.

It's shocking how much ticket prices have doubled in the last few years. Its making concerts as much as a holiday when you include transport.

Holly

Why aren't the tickets for gigs broken down to see where the money goes, i.e. taxes, VAT, and actually to the artist . Fees are getting out of hand.

Ian

Two interlinked stories dominated the money world this week - inflation and interest rates.

As expected, the Bank of England held the base rate at a 16-year high of 5.25% on Thursday.

The nine-person Monetary Policy Committee voted 7-2 in favour of holding them - the same split as the last time it met.

Oureconomics and data editor Ed Conway said: "Everyone now is kind of in a holding pattern until August when the next meeting takes place.

"That is the moment where people think there could be a cut. We're going to potentially be waiting until August and maybe even November - it really depends on what happens with the data."

Rates have been elevated over the last few years to reduce consumer spending and encourage saving - when that happens, price rises (inflation) usually slow.

Now inflation is down to 2% (May's figures were released on Wednesday), isn't the battle won?

That's certainly the interpretation Rishi Sunak wants you to believe - and there's no doubt inflation falling is massive after three years of spiralling prices instigated by the Ukraine war and subsequent energy crisis.

It's worth noting too, as the government did, that the UK is faring well internationally when it comes to inflation...

But there was bad news buried in the good news. Services inflation was expected to drop much more sharply - instead it remained at 5.7%.

Business correspondent Paul Kelso explained: "While the headline rate has been reined in, primarily by food prices rising more slowly than a year ago, inflation for all services remains at 5.7%.

"This is precisely the sort of 'sticky' above-target domestic inflation the Bank has always feared would linger after energy price shocks fell away, and the reason it forecasts the rate will actually rise in the second half of the year."

Economists are also concerned about this - analysts at Pantheon Macroeconomics see inflation creeping up to 2.9% by November.

Wage growth also remains high and, while this is great for workers, it is inflationary.

Setting all the economics aside, there was also a school of thought the Bank will not move during an election campaign - to make sure it does not influence the polls, which we saw on Wednesday.

After the rate decision, the most likely date for a cut was pushed back from August to September, according to market forecasts.

This is bad news for borrowers - though savers may enjoy higher rates on their cash for longer.

Some savings rates have been rising, and others have been falling, but the top five easy access accounts are still paying more than 5%.

It's also worth reiterating, as always, that inflation falling doesn't mean prices are - for that, we'd need negative inflation.

Conway focused on overall inflation over the past three years - rather than annual inflation - to see how much prices have gone up.

His charts, as always, are eye-opening...

The Money blog is your place for consumer news, economic analysis and everything you need to know about the cost of living - bookmark news.sky.com/money.

It runs with live updates every weekday - while on Saturdays we scale back and offer you a selection of weekend reads.

Check them out this morning and we'll be back on Monday with rolling news and features.

The Money team is Bhvishya Patel, Jess Sharp, Katie Williams, Brad Young and Ollie Cooper, with sub-editing by Isobel Souster. The blog is edited by Jimmy Rice.

Around 1,500 workers at Tata Steel are to hold an "all-out indefinite strike", the Unite union has announced.

The industrial action at Port Talbot and Llanwern, Newport, will begin on 8 July and is expected to "severely impact" the company's UK operations, the union said.

It comes in response to plans to close Tata Steel's blast furnaces in South Wales, putting 2,800 jobs at risk, according to the union.

Unite said it would be the first time in more than 40 years that steelworkers in the UK have gone on strike.

Industrial action, including staff working to rule and a ban on overtime, began earlier this week.

The union's general secretary Sharon Graham said: "The strikes will go on until Tata halts its disastrous plans.

"Unite is backing Tata's workers to the hilt in their historic battle to save the Welsh steel industry and give it the bright future it deserves."

The UK's biggest trade union has officially backed the campaign to introduce a four-day working week.

Unison has argued the flexible working pattern could help employers recruit and retain staff, and has demanded the next government take action to make sure more businesses adopt it.

Campaigners have argued that research shows business performance and productivity increases when staff are able to work a four-day week.

Unison's general secretary Christina McAnea said the COVID pandemic proved people could do their jobs from home and, with the use of AI on the rise, the move was inevitable.

"What's needed is a rethink on how workplaces are organised, as well as progressive policies that future-proof people's livelihoods and protect their wellbeing," she said.

Last year, 61 companies across the UK took part in a four-day working week trial, and 56 of them agreed to stick with it.

The Great British summer could finally be arriving, with some forecasts suggesting there could be a heatwave next week.

But as temperatures creep towards 30C, technology in your home, including mobile phones and broadband routers, can overheat.

Placing a router in the coolest room, away from direct sunlight is the best way to ensure you stay connected to the internet, experts at Uswitch.com have recommended.

Mobile phones are also designed to work up to 35C.

Putting devices in direct sunlight can put them under additional strain.

Uswitch.com says by closing down unused apps, checking non-official chargers, and avoiding putting mobiles in a fridge or freezer, can keep them cooler for longer.

As thousands of Taylor Swift fans descend on Wembley Stadium for the blockbuster Eras tour this weekend, parents who are set to endure the clapping, screaming and crying have the chance to bag themselves a freebie.

Tech retailer Curry's is giving away free JBL noise-cancelling headphones to the first 50 parents or guardians who show a valid concert ticket.

"Taylor Swift's tour in Wembley will be a musical moment like no other," Stuart Taylor, store manager at Curry's in Wembley, said.

"But we know she isn't for everyone.

"We have already seen so many videos of social media of parents taking their kids to dates on the tour so far, so we wanted to give something back to parents doing their duty - whether they're going with their kids or playing taxi driver."

The deal only applies to the Wembley store in northwest London.

Government borrowing was less than expected in May, new figures have revealed.

Net borrowing - the difference between public sector spending and income - was £15bn, an increase of £0.8bn on the same time last year, the Office for National Statistics said.

The amount is below the £15.7bn forecast by the Office for Budget Responsibility and less than expected by economists.

However, it's still the highest amount for the month of May since the COVID-19 pandemic.

Retail sales rose by a better-than-expected 2.9% in May as increased footfall, better weather and deals saw shoppers return to high streets, according to officials.

It comes following a poor performance during the previous month as days of heavy rain dampened demand across much of the country.

Economists polled by news agency Reuters had been expecting a rise of around 1.5%.

Meanwhile, the Office for National Statistics also revised its retail sales figures for April.

It previously estimated that they fell by a worse-than-expected 2.3%, but now it says the drop was 1.8%.

Microsoft has regained the title of the world's most valuable public company,just days after it was overtaken by one of its rivals.

Computer chipmaker Nvidia lost its hold on the top spot after its shares slipped by 3.5% in the US yesterday, leaving the company valued at $3.2trn (£2.5trn).

Nvidia, Microsoft and Apple are now in a three-horse race for the top spot, while they are also battling to become the world's first $4trn (£3.2trn) firm, analysts say.

A key factor to watch is whether Nvidia can maintain its dominance in AI, or if its market share will be eroded by its rivals as they invest heavily in the field while racing to catch up.