Jonathan Davidson, the FCA’s director of supervision – retail and authorisations, warned that as the number of people aged 80 and above is set to more than double in the next 25 years, this meant there was an increasing demand for a broader range of products.
Mr Davidson told delegates at the Council of Mortgage Lenders’ annual conference in November: “The home is now seen as a pension. It is a way to pay for long-term care and as something to pass on, but equity release is not the panacea for this problem.
“We’re keen to support innovation in this area. It is as much an opportunity as a challenge.”
His comments came as the CML published an independent research report on consumer demand for retirement borrowing.
With a 51 per cent increase in the over-65 population projected to occur between 2010 and 2030, the report concluded that it was vital to promote sensible and suitable mortgage finance to support the aspirations and, potentially, the social care costs of older homeowners.
Adviser view
In October, specialist provider More 2 Life lowered the rate on its lifetime mortgage to 6.35 per cent and brought the minimum age for joint lives from 70 to 65. However, Clive Balchin, managing director at Lancashire-based James Trickett Sons, said the interest rate seemed quite high. Mr Balchin added: “It seems like the ideal client for this product is someone who is 75 years old and has no children, because they would not be worried about the rate of interest eating away at the equity.”
