The government and the regulator have taken their eye off the issue of lending into retirement by focusing on first-time-buyers, according to the Council of Mortgage Lenders’ chairman.
Speaking at the Financial Conduct Authority’s mortgage conference today (7 September), Moray McDonald also extended his criticisms to lenders while giving an ‘end of term report’ score of three from 10.
“There has been no massive political debate around this, instead they have focused on the symptom rather than the cause; first-time buyers rather than retirees,” he told delegates, adding the regulator’s mood has been essentially set by government, with the Mortgage Market Review leading to more restrictions around lending into retirement.
The CML’s members are also not doing enough to serve older borrowers though, according to Mr McDonald, who promised a report into innovation of products for this demographic - or a lack thereof - in the sector by November.
“The report card says ‘must try harder’. Innovation must come from mainstream lenders, because most consumers will still go to their bank,” he stated, urging lenders to take advantage of demand and a relationship with the regulator that has apparently never been better.
“Innovation came back slowly after the crisis, the focus has been on making sure we’re doing business within MMR rules; I think we’re gradually coming out of timidity.”
Edward Oxley, the FCA’s manager for mortgage policy, echoed director of strategy and competition at the Financial Conduct Authority’s Christopher Woolard’s earlier statements around asking the industry whether there was more that could be done to meet the needs of the growing elderly market.
He also noted that their statistics showed that lending into retirement is on the increase and that the evidence suggests that the MMR has not bitten as hard on the sector as some have suggested.
Nigel Waterson, chairman of the Equity Release Council, admitted those firms his organisation represents are only lending a fraction of the market’s potential, something which was partly down to awareness.
He said: “People and advisers just don’t think about equity release. It is a product of last resort rather than part of retirement planning.”
Jane Vass, head of policy at Age UK, argued there is a much broader picture that needs to be addressed than just equity release.
She said: “We need to make the whole market work for the ageing population. I don’t accept the model of elderly people as ‘house blockers’.
“I’m not sure the market is diversified and flexible enough to meet the needs of people who want to age in place, as well as those who do need to downsize.”
All members of the panel agreed that more also needed to be done to help those looking to downsize, turning to builders to make retirement properties more attractive to the elderly.
The Equity Release Council’s Mr Waterson added that retirement housing sounds like a “gulag for older people” and argued for a broad range of options for retirement housing needs.
peter.walker@ft.com
