Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Strategy. Read the original article for full details.
FCA Urged to Mandate Later Life Lending Advice for Older Borrowers
Calls have been made for the Financial Conduct Authority (FCA) to make it mandatory for advisers to discuss later life lending options with older borrowers. This follows concerns that most over-55s in the UK are not being offered specialist products such as lifetime mortgages or retirement interest-only (RIO) loans.
At the Equity Release Council’s recent Later Life Lending Summit, the FCA’s Emad Aladhal described specialist later life lending products as a potential ‘fourth pillar’ of retirement, alongside state, workplace, and private pensions. Despite over-55s in the UK holding an estimated £3.7 trillion in property wealth, few are using it to support their retirement.
FCA data shows that of 394,778 loans advanced to over-55s last year, only 7.6% were lifetime mortgages or RIO loans. The majority—299,980 loans—were product transfers or remortgages. The report highlights that most advisers do not regularly discuss later life lending products, often due to a lack of permissions to advise on these options.
Currently, 6,155 individuals are certified to advise on equity release transactions, with around 2,000 estimated to be active advisers. This is in contrast to over 35,000 advisers in the mainstream mortgage market. The report suggests that creating a framework for all advisers to cover all options, or at least refer clients to qualified individuals, could help address this gap.
The FCA is currently consulting on ways to increase the take-up of later life lending products, with outcomes expected in the second half of the year. The issue is particularly relevant as studies indicate that millions of older homeowners may have insufficient retirement income, and many could benefit from accessing their housing wealth.
For UK letting agents and inventory clerks, these developments may influence the property market as more older homeowners consider unlocking property wealth through specialist lending products.
Source: Mortgage Strategy