22% of UK homeowners with a mortgage – equivalent to 2.8 million people – say repayments are stopping them from saving more for retirement, according to new findings from the Equity Release Council and Canada Life.

This figure has spiked since 2021, when only 14% said the same. It includes 515,067 homeowners who are still paying a mortgage beyond the age of 55.

16% of this older group say the burden of mortgage debt is holding them back from retiring completely, up from 14% in 2021. 10% say their loan is stopping them from reducing their hours at work, more than double the number impacted in 2021 (4%).

The findings come from the Council’s Home Advantage study of 5,000 UK adults’ financial attitudes and experiences. The data shows how the strain of managing their mortgages – which often involve larger sums and longer terms than previous generations – is having a major impact on people’s wellbeing and financial plans, exacerbated by higher interest rates.

Among all UK homeowners with a mortgage, 21% say their current mortgage debt is preventing them from affording a comfortable lifestyle from day-to-day, up from 13% in 2021.

Mortgage worries are also keeping 13% of people awake at night, preventing 11% from moving house and prompting 7% to pause family plans.

The study, supported by Canada Life study, shows that, overwhelmingly, 90% of homeowners think it’s important to be mortgage-free by the time they retire. However, the reality is likely to be very different with only 66% of those with mortgages believing they will clear them before they retire, and just 60% of those aged 55 and over. Younger generations of mortgaged homeowners are also less likely to feel that it’s important to retire mortgage-free.

Among those aged 55 and over, 20% of mortgaged homeowners – equivalent to 572,297 people – do not expect to retire mortgage-free, while another 19% are not sure.

The Council says that changing landscape is prompting more homeowners to bank on their property wealth and later life mortgages to help manage their money as they grow older. 31% of UK consumers believe accessing property wealth in later life can improve their finances and boost their retirement income, a significant rise from 25% in 2021.

26% now believe a later life mortgage could be a useful way to boost retirement income, an increase of five percentage points since 2021 when 21% felt this way.

Over the last five years (2019-2023) over-55s have taken out 201,575 new equity release plans to support their later life finances. These products allow homeowners to access the wealth tied up in their property following a regulated financial advice process and with additional safeguards provided by the Council.

This level of activity represents a 30% rise compared with the previous five years, when 155,082 new plans were taken out between 2014-2018.

Jim Boyd, CEO of the Equity Release Council, said: “With higher interest rates leading many people’s monthly mortgage payments to rise, this harsh reality is making it difficult for homeowners to prioritise retirement savings alongside their mortgage and wider bills.

“While this might be something they can just about manage in the short term, the real concern of this spike in mortgage costs is the strain it puts on people’s long-term financial resilience. It’s truly alarming that mortgage debt has become so uncomfortable that people are having to putting off starting a family, ending a relationship, or changing career. Having to push back key milestones and life moments like this is not only disheartening but could ultimately be detrimental to society as a whole.

“Rather than struggle against the tide, we need to recognise we are in a new era where the goal of becoming mortgage free will, for some people, be less important than the practical need to access property wealth in later life. With approximately £2.63 trillion of net housing wealth in homes owned by people aged 65 or over, there are clear signs that a shift in the national conscience is underway and property wealth is stepping into the spotlight for retirement planning conversations.”

Tom Evans, managing director of retirement, Canada Life, added: “Retirement feels like a distant dream for many, and having worked hard throughout life, it’s logical to hope or even expect to be mortgage free when reaching this milestone. As the past few years has shown us though, unexpected changes can happen, with plans getting turned on their head. As such, many of us will face the possibility of having to adjust our ways of living in retirement.

“Whilst this may feel unsettling, it’s important to remember that there are always options. Lifetime mortgages now offer greater flexibility to individual needs, and so more people may consider the prospect of using property wealth alongside other assets to fund retirement. Our customer data shows that paying off an existing mortgage has been the top reason for releasing equity for the past six years, but this is just one of many drivers for customers releasing value from their homes.

“For those considering releasing equity, it’s important to do lots of research discuss it with your family first and then engage with a professional financial adviser.”