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Fewer than 700 RIO mortgages given green light

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  • 12/11/2019
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Fewer than 700 RIO mortgages given green light
Mortgage lenders have completed just 660 retirement interest-only mortgages since the new-style home loan for the over-55s was launched in March 2018.

 

The figures were revealed after This is Money sent a Freedom of Information request to the Financial Conduct Authority.

Up to July this year, 548 retirement interest-only mortgages (RIO) had been sold in 2019 taking the total to 660.

In the latest Mortgage Solutions Supper Club, equity release advisers said it was unsurprising that RIO mortgages had not taken off because the affordability assessments were too restrictive.

Brokers said the mortgages offered older borrowers good value because the interest rates were competitive, but not many joint borrowers could pass a stress test that is based on a single person’s income.

One broker said: “The regulator is trying to get its head around why retirement interest-only mortgages aren’t selling. But we know why. There’s an issue around affordability.”

Brokers agreed that if the “affordability wrinkle was ironed out”, RIO mortgages could pose a threat to the equity release advisers if they were not talking to borrowers about the whole range of later life mortgage options.

 

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