The need to serve a growing population of older homeowners is producing a new generation of mortgage products, according to the latest report from the Intermediary Mortgage Lenders Association (IMLA).
In response, IMLA is calling on UK financial advisers to break down the silos between pension and mortgage advice, and offer a more holistic service to keep up with the pace of product innovation.
In comparison, the UK population has increased by 28% over the same period, while the overall homeowner population has risen just 9%.
The report has showed that homeowners over 55 now hold 69% of the UK’s housing equity, with retirees’ mortgage debt set to double by 2030.
The report also notes that over 40,000 interest-only loans held by over-65s are due to mature each year between 2017 and 2032, with many of these borrowers requiring extended mortgage terms to stay in their homes through retirement.
As such, the report surprisingly has showed that lifetime mortgage lending increased by 29% annually since 2014 as the later life lending industry has developed a raft of innovative capital repayment, retirement interest-only and lifetime lending options to address the growing demand.
Financial advice needs to evolve
These new products, with improved features such as partial repayments and drawdown facilities, are leading to a ‘softening’ of the traditional divide between later life and mainstream financial products.
IMLA notes that financial advice has traditionally been found in silos and much more work needs to be done by guidance and advice on signposting retirees to better support decision-making.
Kate Davies, executive director at IMLA, said: “Our report finds that many retirees’ homes are worth as much or more than their pensions, and both elements need to be considered as part of a wider retirement plan. 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.
Davies said IMLA welcomes recent reviews of later life lending published by trade bodies the Equity Release Council and Building Societies Association and the Financial Conduct Authority.
“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,” she added.