Mind the gap: The overlooked middle in the 50+ mortgage market – Pagan

The mortgage market has become increasingly interested in 50-plus borrowers.

That’s hardly surprising. People are living and working longer, reaching their 50s with very different combinations of income, property wealth, pensions and commitments.

That interest is justified, but it’s not evenly distributed.

At one end, the mainstream mortgage market is already supporting hundreds of thousands of customers over 55. The Financial Conduct Authority (FCA) says almost 330,000 mortgages were advanced to over-55s in 2025, with only 9% made up of lifetime mortgages or retirement interest-only (RIO) products.

At the other end, equity release, principally through lifetime mortgages, is a well-established market for customers who need or choose to access housing wealth without mandatory monthly payments.

RIO sits separately. It can be valuable for a customer who wants to continue paying the interest without a fixed repayment date, but volumes remain comparatively low. The FCA recorded 3,002 RIO sales in 2025, compared with 26,974 lifetime mortgages.

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Between these established parts of the market is a less visible group: customers who may no longer fit comfortably within standard mortgage criteria, but don’t necessarily need or want equity release or RIO.

This is the overlooked middle of the 50-plus mortgage market.

 

The overlooked middle

A borrower can be employed or drawing a sustainable pension income, hold substantial equity and comfortably maintain their mortgage. Yet as they move through their 50s and beyond, available terms may shorten and mainstream options can narrow quickly, particularly where future income or plans are less certain.

That can create a false choice: repay all of the capital over a shorter term, potentially pushing up the monthly payment, or move into a product designed around very different needs.

Equity release may be the right answer for someone who wants to release property wealth without servicing interest each month. But interest may roll up and reduce the equity remaining, while the costs and future options differ from a mainstream mortgage. It should not become the automatic next step simply because mainstream criteria have narrowed.

RIO offers a different structure again. The borrower pays the interest and there is no fixed end date. It can be useful, but low take-up and limited availability underline the need for more choice around it.

 

Start with the mainstream options

Before moving into either of those parts of the market, it’s reasonable to ask whether a conventional interest-only or part and part mortgage could still meet the customer’s needs.

For someone with sustainable income, meaningful equity and a credible repayment strategy, mainstream interest-only may offer a simpler route. It can help manage monthly expenditure without automatically committing the borrower to a product structured around death or entry into long-term care.

Part and part can provide a useful middle ground. The borrower continues reducing some of the capital while keeping the monthly payment lower than it would be on a full repayment basis.

The objective is not to argue that one mortgage type is universally better. It’s to make sure 50-plus borrowers are not directed towards a specialist solution before suitable mainstream options have been properly considered.

 

Interest-only has changed

Interest-only still carries baggage from the years before the financial crisis, when loans were sometimes arranged without enough scrutiny of how the capital would eventually be repaid.

Responsible interest-only lending today looks very different.

It begins with affordability, equity and a credible repayment strategy. It should not depend on an uncertain inheritance or an assumption that house prices will solve the problem. The lender and adviser need to understand how the mortgage will be repaid and whether the structure remains appropriate for the customer.

The FCA’s Mortgage Rule Review proposes greater flexibility around interest-only, part and part and RIO lending, while retaining affordability requirements and consumer protections. The review also acknowledges that customers who cannot extend a repayment term because of age, or who prefer not to, may benefit from greater flexibility where the right safeguards are in place.

Greater choice does not have to mean weaker lending standards. Nor should the market wait for every rule to change before using responsible options already available.

 

Certainty, flexibility and peace of mind

For many 50-plus borrowers, the structure surrounding the mortgage may be just as important as the repayment method. The lowest headline rate is not the only measure of value.

Someone planning around income changes, pension access and other priorities may value knowing their mortgage payment for the next 10 or 15 years. That certainty can provide peace of mind and reduce repeated refinancing decisions or an unexpected payment shock.

But certainty should not mean being trapped. A customer may move home, receive a pension lump sum, sell another asset or decide to make substantial overpayments.

Long-term certainty works best with the freedom to respond to those events. That means looking beyond the initial rate to features such as uncapped overpayments and the ability to move home or repay from the customer’s own funds without an early repayment charge.

This thinking shaped April Mortgages’ Interest Only+ proposition. It combines interest-only and part and part borrowing with longer-term payment certainty and the flexibility customers may need as their circumstances change.

It is not intended to displace equity release or RIO where either is the right solution. It fills a different need: a mainstream option for customers who can service the interest, have a credible way to repay the capital and want certainty without giving up control.

It also helps mainstream advisers support cases that might otherwise be pushed into a specialist market sooner than necessary.

 

One market, more possibilities

The FCA has highlighted the fragmented nature of advice across mortgages, pensions, investments and housing wealth. Customers do not experience their finances in separate silos, so the industry should not assess them that way.

Advisers need access to a broad range of options, and lenders must give them the ability to consider each customer properly.

The first question should not be: ‘Which product for 50-plus borrowers does this person need?’

It should be: ‘What are they trying to achieve, how will they repay the mortgage and which structure gives them the right balance of affordability, certainty, flexibility and control?’

The ambition should be to close the gap between the different parts of the market, so suitable customers can remain in a mainstream mortgage for longer and move to another solution when their needs, rather than their age, make it right.

So mind the gap: turning 50 should broaden the mortgage conversation, not narrow it.