Later Life  

Advisers urged to 'evolve' in later life lending shift

Advisers urged to 'evolve' in later life lending shift

The Intermediary Mortgage Lenders Association (Imla) has called on advisers to "break down the silos" between pension and mortgage advice as figures showed UK homeowners were ageing faster than the wider population.

Figures from the Office for National Statistics showed the number of over-65 homeowners in the UK had risen by 52 per cent in the past 20 years - almost six times the UK homeowner average.

Imla said this demographic shift had led to homeowners aged 55 and over holding 69 per cent of the UK’s housing equity, with retirees’ mortgage debt set to double by 2030.

The news comes after charity Age UK issued a stark warning at the end of last year that there were now 300,000 more pensioners living in poverty than in 2012/13.

In its later life lending report, Imla said the need to serve a growing population of older homeowners had produced a new generation of mortgage products but financial advice needed to evolve as well.

The report claimed financial advice was traditionally in "silos" and more work was needed to help retirees make better decisions - with more than 40,000 interest-only loans held by over-65s due to mature each year between 2017 and 2032.

Kate Davies, executive director at Imla, said as more retirees sought to stay in their homes or unlock equity, product innovation would drive lending forward and make it a bigger component of financial planning in retirement.

Ms Davies said the report found many retirees’ homes were worth as much or more than their pensions, and both elements needed to be considered as part of a wider retirement plan.

She said: "This creates challenges for those providing financial advice, many of whom will be expert in one area – pensions, investments or mortgages – but who will not necessarily have the qualifications or permissions required to advise across the spectrum.

"Much research has been done which identifies the problem facing older borrowers – the challenge now is in pulling together the various strands to make real progress. We look forward to playing a full role in that."

At the beginning of August, Leeds Building Society and Scottish Building Society both launched a retirement interest-only mortgage, after the Financial Conduct Authority's review of later life lending earlier in the year.

Earlier this year the FCA changed its rules to allow for the creation of retirement interest-only mortgages for older consumers, in which the loan would only be repaid on a specified life event such as the customer’s death or move into residential care.

Jazz Jhumat, a financial adviser with Danestone Mortgage & Financial Services, told FTAdviser many retirees were finding it difficult to manage their existing mortgage commitments and lenders were trying to respond with product innovations.

She said: "I have loads of cases on my desk at the moment where they have no means of repayment and no investment vehicle."