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Broker compliance departments have hit the brakes on retirement interest-only – Tipton

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  • 20/09/2018
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Broker compliance departments have hit the brakes on retirement interest-only – Tipton
Retirement interest-only mortgages have not taken off as expected, as broker compliance departments have slammed the brakes on deals going through, according to Tipton and Coseley Building Society.

 

There’s still a great deal of uncertainty around the products, which were in March reclassified as a mainstream mortgage by the Financial Conduct Authority (FCA), Cammy Amaira, director of sales and marketing at Tipton (pictured) told Mortgage Solutions.

He said many firms are not sure whether equity release qualifications should be held before advising on retirement interest-only.

However, Amaira expects the mortgages to become a mainstream product once compliance departments have given advisers the go ahead.

He said: “Retirement interest-only is a great product and is going to take off… interest has been good.

“But compliance departments have put the brakes on as they look into it.

“I’m very confident once compliance do their due diligence, the green light will be given to sell.”

Tipton and Coseley launched retirement interest-only mortgages in June.

A number of other building societies including Leeds, Mansfield and Buckinghamshire have also entered the market, since the FCA change earlier this year.

Nationwide has revealed plans to launch retirement interest-only, and Amaira said he expects more lenders to offer the mortgages, which will in turn pull more brokers into the market.

He encouraged brokers already doing later life lending to “embrace” retirement interest-only as it adds another “string to their bow”.

At the Financial Services Expo last week, BSA head of mortgage policy Paul Broadhead said RIO is a welcome addition to the later lending life market, but said its currently a niche product with low volumes.

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