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Mainstream advisers may be missing a trick by sidelining the RIO market – Pallett

by: Allison Pallett, sales director at Livemore Capital
  • 21/05/2021
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Mainstream advisers may be missing a trick by sidelining the RIO market – Pallett
It has been three years since the Financial Conduct Authority reclassified retirement interest-only (RIO) mortgages as mainstream products.


While many hoped this would shake up the later life lending market, in reality take-up of RIO mortgages has been lower than expected.  

In my opinion, there are a number of reasons for this.  

First, brokers who advise on mainstream mortgages may have felt nervous about asking customers supplementary questions around pensions and taxation to gauge affordability. They may also have felt they lacked the tools to recommend RIO mortgages. 

Second, there’s the elephant in the room; the commercials for equity release are more favourable for brokers in comparison to RIO mortgages.  

Third, RIO mortgages fall between the equity release and mainstream markets. While this appears to pose a challenge for some brokers, it doesn’t need to.  

If you advise on mainstream mortgages, you can simply ask your customers a few extra questions and this will allow you to expand your coverage into the RIO sector, where appropriate.  


A thriving RIO market 

I believe the mainstream market needs to take this leap of faith, as a thriving RIO mortgage market will create better outcomes for the over-55s.  

This emerging sector is not as complicated as some infer and there are lots of potential customers out there who need your help. What’s more, there is an opportunity to offer them the service they deserve. 

If a large proportion of your client bank is over-55, explore the options available in the mainstream market first, which includes RIO – and if you can’t find something appropriate, equity release may be the answer. This approach lowers the risk of losing these clients and can help them to achieve the best outcomes possible. 

The demographics of the RIO market are irrefutable, given the level of mortgage borrowing the over-55s are carrying and the fact we have an ageing population.  

So far, we have found mainstream brokers have become incredibly engaged once they realise they don’t need to hold additional equity release qualifications to advise on RIO, given its regulatory classification as a mainstream product.  

You may be missing a trick by not exploring this growing sector. 

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