Over-55s lender warns wage data and $100 oil add pressure on households and retirement savers
UK wage growth held steady at 3.7% in the three months to August while hiring cooled, official data showed, a mix that one later-life lender says raises the odds of another Bank of England rate rise.
Regular pay, excluding bonuses, rose 3.7% on the year in June to August, the Office for National Statistics (ONS) said in its labour market overview on Tuesday. Growth has been relatively stable over the past six consecutive three-month periods. Total pay, including bonuses, also rose 3.7%, down from 3.9% in the previous period. After inflation, regular pay grew 0.6% and total pay 0.7%, using the CPIH measure.
The labour market remained broadly flat. The unemployment rate was 4.7%, down 0.1 percentage points on both the quarter and the year, while the employment rate for people aged 16 to 64 edged up 0.2 percentage points to 75.3%. Vacancies fell by 21,000, or 2.9%, to 691,000 in July to September. The ONS said the decline came mainly from smaller firms, which continue to cite higher labour costs as a reason for not recruiting. HM Revenue and Customs payroll data showed payrolled employees down 111,000, or 0.4%, between August 2025 and August 2026, though little changed on the month.
“While modest rising wage growth may seem like good news on the surface, it also makes it more likely that the Bank of England will raise interest rates at its next meeting,” Dave Harris, chief executive of specialist over-55s mortgage lender more2life, said.
Rates and energy prices in focus
The Bank of England held Bank Rate at 3.75% on 17 September, voting 6-3, with three members preferring an increase to 4%, according to the Bank’s summary. Governor Andrew Bailey said a rate rise becomes more likely the longer global energy-price volatility persists. The next decision is due on 5 November.
Consumer prices rose 3.1% in the year to August, up from 2.9% in July, the ONS reported. Brent crude was trading at about $100 a barrel in early October, according to one market round-up.
“With oil topping $100 a barrel and inflation climbing again, the Bank’s Monetary Policy Committee may feel it is necessary to step in to stop prices spiralling – and stronger wage growth only adds to the pressure,” Harris said.
Squeeze on older households
The ONS figures suggest older workers are holding their ground. The unemployment rate for people aged 50 and over was 2.6%, and the employment rate for those aged 50 to 64 was 72.3%, up 0.5 percentage points on the year.
Even so, Harris said higher living costs and the threat of higher rates are weighing on people in this age group.
“As an over-55s lender, we see every day how hard rising living costs and the threat of higher rates are hitting people in their 50s and 60s. Many are still supporting children, paying off mortgages and trying to save as much as they can into their pensions all at once,” he said.
“The reality is that 15 million people are already undersaving for retirement, according to the Pensions Commission. Any prolonged squeeze on their finances will only make that worse.”
The Pensions Commission’s interim report, published in May, put the number of under-savers at about 15 million and warned it could reach 19 million without action. A final report with recommendations is expected in early 2027.
“Unless something changes, and quickly, millions face a hit to their living standards in retirement. But many have built up substantial wealth in their homes, giving them more options than they might realise,” Harris said.
For brokers, the mix of firm pay growth, a softening jobs market and a possible rate rise offers a reference point for conversations with clients approaching or in retirement, including those weighing how to use housing equity.
