CML to look into home loans for older people

CML to look into home loans for older people

The Council of Mortgage Lenders has set up a group to look into the development of home loans for the elderly.

CML director general Paul Smee has said he wants to take up the challenge set by the FCA.

According to Mr Smee, Linda Woodall, director of mortgages and consumer lending at the FCA, recently backed lending into retirement as long as lenders took “a proportionate and common sense approach”.

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Following the FCA’s comments, Mr Smee said the CML board was bringing together a group of members to look at borrowing into retirement, identify any obstacles, and consider how to address these.

He said this work would start soon, adding that it was good to see the FCA tackling head-on the myth that lending into retirement was somehow below the regulatory salt.

Mr Smee said: “We will have to factor in the new pension landscape and the ramifications of interest-only mortgages.

“We will have to consider how traditional mortgage and equity release products can relate to each other. At the moment, there feels like something of a clunky disconnect between the markets – certainly if you are a consumer.”

He said the CML would come up with a vision and concrete proposals later this year.

Adviser view

Mel Kenny, director for London-based Radcliffe and Newlands, said lenders would have to carefully consider the risk in developing mortgage products for the retired.

He said: “It is all well and good saying there is flexible retirement now, but why should lenders necessarily develop products? Lenders have to consider the risks of lending.”