The Intermediary – July 2025 - Flipbook - Page 12
L AT E R L I F E L E N D I N G
In focus
The crest for later
life lending – or just
the beginning?
L
ast month, The
Intermediary reported
a 33% year-on-year
increase in later life
lending in the first
quarter of 2025. It’s a
significant number – and for those of
us working in this space, it mirrors
what we are seeing in real time.
The once-niche specialist lending
market has evolved into a diverse, fastmoving sector. At Hodge, we’re proud
to play a part in that evolution. But as
anyone in the industry knows, it’s not
just about numbers, it’s understanding
what’s behind them.
The surge is being fuelled by
the needs of a growing, changing
demographic. From pension shortfalls
to the rising cost of living, from
inheritance planning to property
wealth being used to support family –
the financial pressures and priorities
of later life borrowers are changing
fast. Lending must change with them.
New kind of borrowing
What defines a ‘later life borrower’
today is not age, but the complexity
of their situation. Some are still
working, others are self-employed
into their seventies. Many are looking
to help younger generations onto the
ladder, diversify their income streams
through buy-to-let (BTL), or improve
the energy efficiency of their homes.
What they share is a need for lending
that adapts to their reality, not the
other way round.
This has changed the shape of
the market. The days of a one-sizefits-all later life product are long
gone. We now see a spectrum of
options: flexible lifetime mortgages,
retirement interest-only (RIO), and
hybrid solutions that allow borrowers
to switch repayment options or make
ad-hoc repayments.
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The Intermediary | July 2025
Many of these products come
with features that allow for partial
repayments, flexible terms or
inheritance guarantees – giving
borrowers more control over how they
meet their financial priorities, such
as reducing their balance over time to
leave more for loved ones.
Downsizing protection is another
feature which gives borrowers the
confidence to move later in life
without facing punitive charges,
acknowledging that lifestyle needs
oen change as people age.
Responsible lending
As an industry, there is a growing
recognition of the importance of
responsible lending. Vulnerability can
impact anyone, and later life lenders
must ensure that every decision is
made with empathy, clarity, and the
right support in place for the future of
the borrower.
Technology is also playing a crucial
role in transforming the customer
journey. From online affordability
calculators tailored to later life
criteria, to more streamlined digital
application processes, technology is
helping make these products more
accessible and transparent.
At Hodge, we see these innovations
as a way to enhance, not replace,
the human touch. Especially when
dealing with customers making
complex, emotional decisions about
their homes, face-to-face advice and
personalised service remain essential.
We’ve done a lile more than
scratch the surface of what later life
lending can offer. We expect later life
lending products to become even more
flexible and responsive to individual
borrower needs. We see more
modular products, where features
like drawdown facilities, repayment
options or inheritance protection can
EMMA GRAHAM
is business development
director at Hodge Bank
be customised based on a borrower’s
specific circumstances. This could
further reduce the risk of unsuitable
borrowing. We anticipate further
growth in sustainable and energyefficient lending.
As the UK housing stock continues
to face pressure to meet energy
performance standards, there’s scope
for later life products that incentivise
or reward borrowers for making
green improvements.
Affordability criteria are also
evolving. Historically, income in
retirement was one of the biggest
hurdles for many borrowers, but
lenders now recognise a wider range of
income sources, including pensions,
investment income, and even rental
income from BTL properties. This has
made it possible for more people to
access borrowing, even if their income
looks very different from when they
were working.
Ultimately, later life lending
is about more than just releasing
equity. It’s about helping people
make the most of their retirement,
stay in control of their finances,
and live with dignity and peace of
mind. As a lender, we see it as our
duty to deliver products that offer
flexibility and choice, underpinned by
responsible lending practices that put
customers first.
We’re not just watching the wave,
we’re riding it. But whether we’re
nearing the crest or only building
momentum, the future of later life
lending is bright, and we’re excited
to continue playing a role in helping
customers use the value of their homes
to achieve their retirement goals. ●
