The most recent publication from UK Finance has reported on the current state of later life mortgage lending, citing an 8.5% decrease to £4.3 billion compared to the previous year. The report details 28,840 new loans advanced to older borrowers in the first quarter, representing an 11.7% drop from the previous year.
Additionally, the report notes a significant decline of 30.1% in new lifetime mortgages advanced, totaling 5,060 in the same period. The value of this lending amounted to £410 million, marking a substantial reduction from the first quarter of the previous year. In contrast, retirement interest-only (RIO) loans experienced a slight rise of 1.4% with 284 loans advanced, totaling £28 million in value, indicating an increase of 16.7% compared to the first quarter of the previous year.
Residential later life loans accounted for 7.9% of all residential loans, while buy-to-let (BTL) later life loans made up 22.5% of all BTL loans.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, expressed concern over the declining trend in later life lending and its influence on retirement planning. She highlighted that the reduction significantly impacts the prospects for retirement planning, particularly in relation to housing costs. Morrissey pointed out that achieving a comfortable retirement income remains a challenging goal for many individuals, with only 39% of households on track for a moderate retirement income as defined by the Pensions and Lifetime Savings Association, excluding rental or mortgage costs.
Despite the decrease in lifetime mortgages, Morrissey noted that equity release continues to play a significant role in people’s retirement plans. She emphasized that the increasing number of individuals taking longer mortgages could exacerbate the challenges faced by retirees in meeting their financial obligations in retirement.
Ben Waugh, managing director at More2life, offered a different perspective, downplaying the decline in later life loans and emphasizing the importance of considering all options for borrowers over the age of 55, including lifetime mortgages. He encouraged individuals to seek expert advice to secure the right outcome for their circumstances.
In conclusion, the latest report from UK Finance raises concerns about the decline in later life lending and its implications for retirement planning and the broader mortgage market. As the landscape continues to evolve, it becomes increasingly crucial for individuals to consider all available options and seek informed guidance to navigate the complexities of mortgage lending in later life.