Later life lending platform Air has warned that the Bank of England’s decision to delay expected base rate cuts is compounding the risk of mortgage shocks for older borrowers – and increasing the need for advisers to consider all available options.

The base rate currently stands at 4%, and analysts now forecast that it may not be reduced further this year due to persistent inflation concerns. The pause means that older borrowers coming to the end of fixed-rate deals face a sharp rise in monthly payments when they remortgage.

According to Bank of England figures, the average borrower remortgaging this year will see annual costs increase by £1,752 – equivalent to around £146 a month – as they transition away from historically low fixed rates, which averaged around 2.4% in 2020.

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Air said older borrowers are especially vulnerable, as many may find it harder to qualify for the most competitive fixed-rate products after retiring or reducing their working hours. This can leave them moving onto standard variable rates, which can reach as high as 8%, significantly increasing repayment costs.

The company is urging advisers to ensure they explore the full range of solutions available for older clients, including modern lifetime mortgages. These products can allow borrowers to pay all, some, or none of the interest, as well as make flexible capital repayments to help manage monthly outgoings.

Will Hale, CEO of Key Advice and Air, said: “Even moving to a new fixed rate can see monthly costs increase significantly for many customers and that applies even more if older borrowers are moving to standard variable rates.

“Many older customers will be particularly at risk as their circumstances may have changed since they last remortgaged. It is vital that all customers over the age of 55 do not default to a new product with their existing lender but instead talk to an adviser who can consider all their options.”

He added that a full review with an adviser allows older borrowers to be matched to a product suited to their individual needs and circumstances. Advisers who do not directly offer later life lending should still ensure they are aware of the full product range and refer where appropriate.

“For customers over the age of 55, affordability should no longer be seen as a binary concept,” said Hale.

“Lifetime mortgages that allow customers to serve some or all of the interest, and/or make ad hoc capital repayments can be a suitable option.

“These products come with added protections such as certainty of tenure and a no negative equity guarantee and, for many customers, can support more financial freedom, a better lifestyle and overall improved outcomes – even if cost of borrowing may be higher.

“Lifetime mortgages have moved well beyond a product of last resort and having a trusted referral relationship in place with a later life lending specialist can allow all advisers to deliver a holistic proposition and good outcomes for their older customers.”