The retirement interest-only (RIO) mortgage market has expanded this year, according to Moneyfacts.
Data from the comparison site showed 21 providers are currently offering RIO mortgages, the highest number it has recorded so far.
Eleanor Williams, finance expert at Moneyfacts, said competition in the RIO sector was on the up.
She said: “[There] are now 21 providers active – the highest we have recorded so far – with three lenders entering this section of the market since February 2020.
“Equally, the number of products available has increased by 38 to 112 since prior to the onset of the coronavirus pandemic in February, demonstrating that there is now a higher level of choice for potential borrowers.”
Ms Williams added: “Overall, provision of RIO mortgages seems to have weathered the storm of the coronavirus pandemic slightly better than the standard residential mortgage sector, as we see growth in both the number of products and number of providers lending in this arena, seeming to show that lenders have the appetite to offer products for those later in life.”
Previous data from Moneyfacts showed the number of mortgages available had dropped by half year-on-year, to 2,404 products at the start of November.
Alongside greater choice in the RIO mortgage market, Ms Williams noted the average rate had increased, reflecting rate changes in the wider, mainstream mortgage market.
The average rate of a RIO mortgage stood at 3.59 per cent as at November 20, compared with 3.25 per cent in September and 0.12 percentage points above the rate in February.
Retirement interest-only mortgages
All fixed and variable rate products
20th Nov 2020
Number of products
Number of providers
RIO mortgages typically have no set end date or term, so that borrowers make monthly interest payments until they pass away or move into long-term care.
In March 2018, the Financial Conduct Authority (FCA) announced a reclassification of RIO mortgages, so that they no longer come under equity release standards and would instead be treated as standard mortgages.
A freedom of information request published by the FCA showed 436 RIO mortgages were sold during the period July 1, 2019 to September 30, 2019.
What do you think about the issues raised by this story? Email us on email@example.com to let us know.