The Intermediary – July 2025 - Flipbook - Page 14
L AT E R L I F E L E N D I N G
In focus
Later life considerations
he later life lending
market has been
saying for years that
it’s important to
consider the use of
housing equity as part
of normal financial planning, but
how mortgage debt is managed post
the age of 50 is also crucial in ensuring
that customers can fulfil their wants
and needs as they move towards – and
through – retirement.
Basic facts from the mortgage and
retirement planning market make
the case. The average age of first-time
buyers is 36, and one in five of them
is over 40. A 36-year-old first-time
buyer opting for a 35-year term will be
paying a mortgage until age 71 – way
past traditional retirement ages.
Borrowing past traditional
retirement ages is already a reality.
Around one in four 55 to 64-yearolds are still paying off mortgages.
People are borrowing until later in
life, and the numbers doing so will
only increase. They need support
with managing their debt while
maximising retirement income.
Paying off a mortgage while
saving for retirement is already
challenging, and will become even
more difficult for many customers.
The average retirement income is
£18,148, according to the Office for
T
National Statistics (ONS), which is
just over £5,000 above the £12,800
threshold to achieve a ‘basic’
retirement, as calculated by the
Resolution Foundation.
Against that background – and
particularly in light of innovation
around lifetime mortgages that allow
customers to serve some or all of
the interest – it does not make sense
for equity release to be seen as a last
resort. People need to maximise every
asset, including property, if they are
to achieve a comfortable and fulfilling
retirement, and they need to start
thinking about it much earlier, with
the support of advisers.
Advisers need support from the
later life lending market to help them
ensure clients are aware of all the
options available to them, and they
need support from regulators, too.
There are strong signs that regulators
are well aware of the need.
Positive on later life
Financial Conduct Authority (FCA)
chief executive Nikhil Rathi certainly
appears to recognise the potential of
the later life lending market.
At the recent JP Morgan Symposium
Pensions and Savings, he said: “Those
who do own a home in later life also
face an evolving picture. For many,
their home is their biggest asset, and
WILL HALE
is CEO of Air
the options and choices in retirement
– on lifestyle, housing, care, and tax,
to name a few – are wider and more
complex than ever.
“So, learning from the past, and
with the right product design and
consumer protections in place, could
later life lending benefit more people,
as part of an individual’s financial
plan, rather than a last resort?”
His colleague Emad Aladhal,
director of retail banking, told the
BSA Annual Conference that later life
lending is “increasingly the norm. We
all need to face up to the complexities
and opportunities of increased
consumer need to continue borrowing
into later life.”
The mortgage market discussion
paper from the FCA published on
25th June included a significant
section on later life lending, but
while this reiterated the scale of the
opportunity and importance from a
societal perspective, it also highlighted
significant structural issues which
need to be addressed. The question
is whether the industry is capable of
stepping-up?
Outlining the opportunity
Products have evolved to meet the
needs of older customers, with the
development of more retirement
interest-only (RIO) mortgages, term
interest-only mortgages and longterm fixed rated products. Lifetime
mortgage lenders are offering higher
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The Intermediary | July 2025
