Mortgage industry looks at retirement lending

Mortgage industry looks at retirement lending

A retirement specialist has urged mortgage lenders to cater for asset-rich pensioners with little income.

David Sinclair, director of the International Longevity Centre – UK, said lenders and regulators had seemingly struggled to meet the challenges created by an ageing society.

He said: “We are living longer, our family structures are changing, we are marrying later and we are working longer. At the same time, financial insecurity will result in more people needing to borrow more and later in life.

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“We should be particularly worried about those pensioners with interest-only mortgages but no linked investment.”

According to a June 2014 28-page report, The UK Equity Bank: Towards Income Security in old age, published by Cass Business School and ILC-UK, the average housing wealth of someone aged 65 or older was £122,000, making up a total of £1.4trn.

In March this year, the Council of Mortgage Lenders revealed that its members had agreed to set up a group looking at lending into retirement and covering themes including product development, the role of regulators and how mortgage lending may be affected by April’s pension changes.

Adviser view

Dean Mirfin, technical director for Preston-based Key Retirement, said: “Advisers and lenders need to focus on a holistic approach to retirement planning that ensures that property wealth is considered alongside pension savings and other investments.”