The later life lending update from UK Finance showed the value of RIO lending amounted to £30m, which was 15.4% higher than 2023. 

In contrast, the number of new lifetime mortgages advanced during the period fell 16.9% year-on-year to 5,610, while the value of this lending decreased by 6% to £470m. 

Simon Webb, managing director of capital markets and finance at LiveMore, said the data continued a downward trend in the market, and suggested older homeowners were facing “increasing challenges in accessing the finance they need to support their later years”. 

Richard Pike, chief sales and marketing officer at Phoebus, added: “While today’s figures for Q2 2024 initially look a bit disappointing, they are in fact an improvement on last quarter’s figures.

“Last quarter, there were only 28,840 new loans advanced to older borrowers compared to 32,990 this quarter. Similarly for new lifetime mortgages, those figures are up from 5,060 last quarter to 5,610 in Q2.

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“We’re seeing strong foundations for continuing growth in later life lending, which will be further helped with lower interest rates and better deals. I think we’ll see more and more innovation in this sector as lenders work hard to gain market share.”

The volume of buy-to-let (BTL) lending to older borrowers totalled 11,420 in Q2, an 18.46% rise, while the value of this increased by 31.08% annually to £1.94bn. 

Residential later life loans accounted for 7.5% of all residential mortgages in Q2, while BTL later life loans represented 22.2% of all BTL mortgages. 

 

Fall in later life mortgage lending to over-70s

In Q2, borrowers aged 70 and over were the only age group to see a drop in new later life mortgage lending. 

This fell by 7.61% year-on-year to 4,490. 

Webb said: “This decline is particularly worrying considering our ageing population, with over 20 million people currently over 55. Interest-only products can be a lifeline for these individuals, but it is clear from these figures that many are unaware of their eligibility and options. This not only limits their financial flexibility but could also exacerbate issues like pension shortfalls or the ability to cover unexpected expenses. 

“For lenders, this is a crucial moment to reassess how we can innovate and adapt to meet the evolving needs of an ageing population, ensuring they are not left in a financially vulnerable position.” 

Meanwhile, there was an 11.1% uplift in new lending to borrowers aged between 55 and 60 at a total of 15,520. Later life mortgage lending to people aged 60-65 rose by 14.88% to 8,800, and there was a 5.56% increase in lending to borrowers aged 65-70, totalling 4,180.