Starting the RIO conversation earlier – Lownds

The regulator said it wanted to examine whether the lifetime and retirement interest-only (RIO) mortgage sector is doing enough to meet consumers’ changing needs.

That question feels especially important at a time when retirement itself is changing so dramatically. Many borrowers are now reaching retirement age with higher levels of mortgage debt still outstanding. A growing number of these borrowers, alongside others entering later life, are also doing so with far more complex financial positions than previous generations, balancing pension income, different forms of earned income, rising living costs and family commitments all at once.

At the same time, attitudes towards retirement have shifted. Borrowers are remaining economically active for longer, whether through choice or necessity, and planning their finances far earlier than they once did. And these factors, among others, are impacting the way lenders and advisers approach later life lending conversations.

RIO discussions are happening earlier

Rather than waiting until a client has fully retired, discussions around RIO lending are increasingly taking place while borrowers are still employed and planning for the future. In short, people are seeking greater certainty around what their retirement affordability position could look like before making major decisions around work, income or homeownership.

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This earlier engagement can help create better long-term outcomes because it gives borrowers more time to assess their options in a calm and structured way. This evolving borrower behaviour also highlights why criteria flexibility matters for lenders.

In a bid to encourage later life conversations to take place that bit earlier, we recently took the decision to update our RIO proposition to allow applicants to still be employed at the point of application, while affordability is assessed using projected pension income.

Importantly, this is not about relaxing standards – maintaining robust attitudes to affordability remains central to later life lending. Instead, it’s about recognising the simple fact that a rising number of people no longer move directly from full-time employment into complete retirement overnight.

Some are gradually reducing working hours, others are supplementing pension income through consultancy or part-time roles, while many simply want greater flexibility around how and when they transition into retirement. Lending criteria and product structures need to reflect these realities if the market is to properly support changing customer needs.

The FCA’s market study also outlines growing awareness that housing wealth may play a larger role within retirement planning over the coming years.

The regulator acknowledged that consumers who cannot fully meet their retirement needs through pension income alone may increasingly look towards property wealth to help support later life finances.

Recent data from the Equity Release Council underlines that demand for later life borrowing solutions is unlikely to disappear, even during periods of market uncertainty. Although equity release lending fell during the first quarter of 2026, adviser sentiment remained positive, with the data showing that 45% of firms experienced rising enquiry levels during the quarter and nearly half expected enquiries to increase further during Q2.

In this type of environment, advice becomes increasingly valuable, as later life lending conversations are rarely simple product discussions. They often involve retirement planning, future income expectations, inheritance considerations and wider family circumstances. Borrowers need support in understanding not only what they can afford today, but what remains sustainable over the longer term.

The FCA’s review will also explore whether new products could emerge to better support changing borrower requirements. Alongside this, it will examine the role of providers, distributors and sourcing systems in shaping outcomes across the sector. This feels like a positive and necessary piece of work, and one that the industry should follow closely as the later life lending sector continues to evolve.