The Intermediary – July 2025 - Flipbook - Page 16
L AT E R L I F E L E N D I N G
In focus
Later life lending
is evolving to meet
modern needs
U
K Finance’s Q1 2025
update shows a 33.5%
year-on-year increase
in activity from Q1
2024. This signals that
older borrowers are
continuing to take a more proactive
approach to managing their finances
– whether through traditional
mortgages, retirement interest-only
(RIO) products, or equity release.
While the cost of living remains
high and retirement income is
increasingly under pressure, this is
not simply a story of necessity. It’s a
maturing market where borrowers
are exercising more control over their
finances in later life. The other great
news is that complaints around advice
remain very low.
Advisers should be discussing future
property wealth very early in people’s
financial advice cycle, as it should be
considered alongside other provisions
for retirement wealth.
Diversification
In the past, equity release dominated
the conversation. Today, the market
has grown to include a broader suite.
RIO mortgages have emerged as a
valuable option for those with ongoing
income who want to retain ownership
and keep monthly payments
manageable. Meanwhile, term
mortgages with maximum age limits
extending well into later life have also
helped broaden accessibility.
This shi is supported by greater
innovation from lenders, many
of which are developing products
specifically designed for older
borrowers, recognising that this group
is far from one-size-fits-all.
The market is taking this sector
seriously, with volume originators
such as tier one lenders offering
products to over-65s, and of course,
16
The Intermediary | July 2025
the very important building society
sector assisting members with some
innovative products.
As the market grows in complexity,
advisers play a critical role in helping
clients navigate the options, assess the
implications for inheritance, tax, and
long-term affordability, and ensure
the solutions align with their wider
financial plans.
But advice alone isn’t enough –
the way products are underwrien
and serviced is equally important.
Traditional affordability metrics
don’t always fit borrowers relying
on pensions, investments or rental
income. Specialist lenders are
responding with more holistic
approaches to income and risk.
This is particularly vital for
interest-only maturities. Thousands
of borrowers are reaching the
end of their original terms with
no repayment vehicle. When the
originating lender can’t offer an
alternative, access to a broad and
flexible later life lending market,
underpinned by agile servicing
platforms, becomes crucial.
Strategic technology
Technology is now a central enabler
of growth and resilience in later life
lending. Beyond digital fact-finds
and affordability tools that support
the advice process, the infrastructure
behind the scenes is just as important,
especially as lenders scale and prepare
for regulatory scrutiny.
Automated servicing and flexible
application programming interface
(API) ecosystems allow lenders to
efficiently integrate with third-party
suppliers that give a competitive
edge, streamline processes, adapt to
regulatory change, and deliver high
service standards at scale. This maers
not just for operational efficiency, but
RICHARD PIKE
is chief sales and marketing
officer at Phoebus
strategically – enabling more lenders
to grow with confidence.
Migrations are a case in point.
As loan books change hands more
frequently and funders increase
liquidity in the market, being able to
migrate accounts quickly and securely
is essential. Platforms like Phoebus
offer automated migrations which
have been delivered in six to nine
weeks. This reduces transformation
risk and is a key consideration
in successful securitisations and
investor confidence.
Tech is also enabling lenders to take
greater ownership of their operations.
By reducing reliance on manual
processes and external support
through automation of basic tasks,
allowing users to deal with cases by
exception, they can control costs and
improve resilience.
Sustainable market
The continued growth of later
life lending depends on ensuring
it remains both responsible and
sustainable. That means products that
truly serve borrower needs, improving
adviser training and resources, and
continuing to raise awareness.
With so much wealth tied up in
property, enabling older homeowners
to unlock equity in a safe and
structured way could help address
intergenerational wealth gaps,
support younger generations, and
improve quality of life for retirees.
Collaboration across lenders,
advisers, regulators and tech providers
is essential. This market can become a
cornerstone of financial wellbeing for
millions in the years to come. ●
