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UK Finance: Q4 2023 later life mortgage lending data - reaction

ended 19. February 2024

At 09:30 this morning, trade body UK Finance published its Q4 2023 later life mortgage lending data. Key points below, reactions from experts, bottom.

  • There were 29,060 new loans advanced to older borrowers in Q4, down 37.1% year on year. The value of this lending was £4.1bn, which was down 42.4% compared with the same quarter a year previously.
  • There were 6,710 new lifetime mortgages advanced in Q4, down 40.1% year on year. The value of this lending was £520mn, which was down 57.4% compared with the same quarter a year previously.
  • There were 255 retirement interest only mortgages advanced in Q4, down 43.3% year on year. The value of this lending was £26mn, which was down 38.1% compared with the same quarter a year previously.
  • Residential Later Life loans in Q4 represent 7.38% of all residential loans. BTL Later Life loans in Q4 represent 21.98% of all BTL loans.

5 responses from the Newspage community

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Justin Moy
Managing Director at EHF Mortgages
The use of later life lending has changed significantly over the past few years, from an income enhancement option through to an early inheritance, specifically Bank of Mum and Dad home deposit scheme. It is now an essential tool for paying off expensive borrowing and basic living costs. With rates reducing in the past few months, the popularity of these products has improved, combined with some major enhancements with product design. Shorter ERC terms are certainly more popular, as well as interest-serviced options that give greater flexibilty to borrowers. As we move into 2024 there will be more demand for retirement lending, and the favourable assessment of income will allow more individuals to keep their home for longer. Should Stamp Duty concessions stretch to down-sizers, this might change the popularity of later life borowing, but now that the painfully expensive 2023 is well out of the way, continued lower rates will help awaken this important market.
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Ben Perks
Managing Director at Orchard Financial Advisers
Later life Lending is a rapidly growing industry. In years gone by people used this for frivolous spending to enjoy retirement or medical needs, but enquiries now are more about day-to-day living. Later life lending products have become more borrower-friendly and we are seeing more enquiries from the baby boomers who need to ease the strain financially.
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Dan Osman
Head of Later Life Lending (Age 55+) at UK Moneyman
Q4 2023 was a difficult period with higher rates meaning that aspirational borrowers were waiting and needs-based borrowers were being forced to accept higher rates. At the moment we are seeing a release of pent-up demand, which should settle to the similar, and hopefully as consistent, levels of business from earlier in 2023. With many lenders recognising the need for different payment options, lifetime mortgages are really coming into their own for those without the ability to look at alternatives. People are more willing to look at servicing the interest and products designed around this from the start are becoming very popular. That being said, more of our cases are still going down the conventional, high street route with lenders that have a flexible approach to age rather than with RIOs where there is still work to be done.
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Gareth Davies
Director at South Coast Mortgage Services
Later life enquiries have transitioned from being ‘want-based’ to ‘needs-based’. People are needing to reassess their borrowing due to their mortgage being at the end of the term, or because they are struggling financially because it’s gone onto a high SVR. The flexibility around later life products can be very attractive and it has to be considered as part of normal retirement planning nowadays. From a consumer perspective, it’s vital that people speak to someone with access to all areas of later life lending though, and not just equity release.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The increased cost of borrowing continues to put some people off equity release, but the state of the country's economy means that more older homeowners need the product, keeping demand higher than it ordinarily would be in these conditions. The cost of living has pushed up the need for additional finance in retirement as many people look to increase their incomes. Also having an effect is the cost of borrowing, increasing mortgage payments for older people. Clearing this debt with a form of borrowing not requiring repayments makes a big difference to some households. As rates come down in 2024, demand will spike as the conditions of necessity are still there.