The Intermediary – July 2025 - Flipbook - Page 13
L AT E R L I F E L E N D I N G
In focus
Why RIO mortgages
are on the rise
T
he later life lending
market is undergoing
a significant
transformation, and the
data is hard to ignore.
According to recent
findings from UK Finance, retirement
interest-only (RIO) mortgage lending
increased by 19.4% year-on-year across
the UK in Q1 2025. At Vernon Building
Society, we’ve seen a 158% increase in
RIO mortgage applications between
January and May 2025 compared to
the same period last year.
This is not a seasonal fluctuation
or a short-term spike. It’s a clear
indication that borrower behaviour
is shiing, and the implications for
brokers are substantial.
The drivers behind this growth
are well understood: longer life
expectancy, rising living costs,
and a growing cohort of older
homeowners who are asset-rich but
income-constrained.
But what’s becoming increasingly
evident is that RIO is moving into
the mainstream of later life financial
planning, and brokers are at the
forefront of this evolution.
Shift in client mindset
Older borrowers have long recognised
the value of using their homes to
unlock capital in later life. Equity
release products have been a wellestablished part of the market for
years, offering a way to access property
wealth without monthly repayments.
But today, the conversation is shiing.
It’s not about a new openness to using
housing equity, but rather a growing
awareness of alternative options.
This shi in mindset is creating
new opportunities for brokers.
Clients are looking for advice that
goes beyond traditional mortgage
solutions. They want to understand
how later life lending fits into their
broader financial goals, whether that’s
supplementing income, funding
home improvements, or helping
children onto the property ladder.
RIO mortgages offer a compelling
solution for many of these scenarios.
For clients with sufficient income to
cover interest payments, they offer
a flexible and cost-effective way to
access property wealth without the
long-term commitments or costs oen
associated with equity release.
Retirement strategy
The surge in RIO demand reflects a
broader trend: property is becoming
central to retirement strategy. This is
particularly relevant in the context
of intergenerational wealth transfer.
Many clients are looking to gi equity
to children or grandchildren during
their lifetime, rather than waiting
until aer death.
RIO mortgages can facilitate
this, allowing clients to provide
meaningful support at a time when
it’s most needed.
There is also a growing awareness of
the potential Inheritance Tax benefits
of giing equity early. By reducing the
value of their estate, clients may be
able to mitigate future tax liabilities
while also seeing the impact of their
support in real time.
These are complex, sensitive
conversations, and brokers are
uniquely positioned to guide clients
through them with care and expertise.
Complexity
As demand for later life lending
grows, so does the complexity of client
circumstances. Many older borrowers
have multiple income sources,
including defined benefit (DB)
pensions, drawdown arrangements,
and investment income. Others may
have lasting power of aorney in place
or require more flexible underwriting
due to health or lifestyle factors.
This complexity requires a lender
that can take a holistic view of the
client’s financial position, working
closely with intermediaries to assess
each case on its own merits.
BRENDAN CROWSHAW
is head of mortgage and
savings distribution at Vernon
Building Society
Later life lending is not one-size-fitsall, so we should remain commied
to providing solutions that are both
responsible and adaptable.
We also recognise the importance
of supporting brokers with clear
criteria, responsive service, and access
to underwriters who understand the
nuances of later life cases.
It’s important to make it easier for
brokers to deliver great outcomes
for their clients, even in the most
complex scenarios.
Growing opportunity
The growth in RIO demand is not a
passing trend. It’s part of a broader
transformation in how people
approach later life finance. As the
population ages and retirement
becomes more fluid, the need for
flexible, sustainable lending solutions
will only increase.
For brokers, this represents a
significant opportunity. Later life
lending is no longer a specialist corner
of the market – it’s becoming a core
part of the advice landscape. Brokers
who are prepared to engage with this
space, build their knowledge, and
partner with lenders that understand
the market, will be well placed to
deliver real value to their clients.
The surge in RIO interest is a clear
signal that the later life lending
market is maturing. Clients are
more informed, more open to new
solutions, and more reliant on expert
advice. Brokers have a vital role to
play in helping them navigate this
evolving landscape.
Later life lending is not just about
borrowing. It’s about enabling
clients to live the life they want, as
well as helping brokers build lasting
relationships based on trust, insight,
and shared success. ●
July 2025 | The Intermediary
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