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UK Finance Q2 Later Life Mortgage Lending

ended 29. August 2024

UK Finance has just published its Q2 Later Life Mortgage Lending data. Key points below. Any thoughts, and any insights into why people are taking out these loans and their current pricing, whizz them across ASAP as this story is BREAKING.

  • There were 32,990 new loans advanced to older borrowers in Q2, down 8.34 per cent year on year. The value of this lending was £5bn, which was down 17.5 per cent compared with the same quarter a year previously.
  • There were 5,610 new lifetime mortgages advanced in Q2, down 16.9 per cent year on year. The value of this lending was £470mn, which was down 6 per cent compared with the same quarter a year previously.
  • There were 326 retirement interest only mortgages advanced in Q2, up 23 per cent year on year. The value of this lending was £30mn, which was up 15.4 per cent per cent compared with the same quarter a year previously.
  • Residential Later Life loans in Q2 represent 7.5 per cent of all residential loans. BTL Later Life loans in Q2 represent 22.2 per cent of all BTL loans.

4 responses from the Newspage community

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Justin MoyVerified
Managing Director at EHF Mortgages
Later life lending as a whole is still suffering from high mortgage rate pricing, given the majority of deals will be for lifetime rates at a time we are starting to see mainstream deals fall. Volumes are down but the value of each case looks higher, and that would reflect the need for more borrowers to repay mortgages that have hit their full expiry and repay expensive unsecured debt, too. The line between Lifetime Mortgages and RIO's has also become more blurred, and the lack of RIO sales suggests the product is not working as it was originally designed. Improvement will come when lenders price appropriately.
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Dan Osman0
Head of Later Life Lending (Age 55+) at UK Moneyman
We are still seeing strong needs-based demand for lifetime mortgages prompted by an overall decrease in rates, particularly at lower LTVs and with the lenders offering more competitive rates for interest serviced lifetime mortgages. However, more conventional lending is better meeting borrower need in many cases either as a standalone solution or part of a phased approach with younger 'older borrowers'. As a holistic firm, we have experienced a decline in the need for RIO mortgages with more flexibility being shown by more mainstream lenders and affordability being similar, in a lot or cases, when comparing repayment and RIO options. These figures, and our own experience, clearly demonstrate a need to move away from siloed advice models concentrating on products specifically designed for older borrowers - if a RIO or interest serviced lifetime mortgage is all that is offered, that is what a client is likely to go away with when there are so many other options out there.
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Gabriel McKeownVerified
Head of Macroeconomics at Sad Rabbit - Substack Newsletter
In a landscape marked by economic uncertainty and shifting financial priorities, many older borrowers are hitting the brakes on borrowing, wary of the road ahead, as the latest figures from UK Finance reveal a decline in lending to older borrowers. Despite the fact that for many, tapping into property wealth is no longer just a luxury but a lifeline. The current interest rate landscape, with rates ranging from 5% to 7% for lifetime mortgages, has deterred some borrowers. The decline in overall lending reflects broader market trends, where financial caution and economic pressures have tempered borrowing appetites. In a world where financial security in retirement is paramount, the ability to leverage property wealth remains a vital tool for many. However, with interest rates climbing, the allure of unlocking home equity is fading, leaving many retirees questioning whether the cost is worth the comfort.
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Simon BridglandVerified
Director at Charwin Private Clients
The last year for the later life sector has been tough, both brokers and lenders will have been down on previous years, as the figures show. That said I remain very confident, as the number of enquiries is still strong. The seeds of doubt troubling those borrowers considering later life lending are interest rates and loan to values. Rates dropping would cause an influx of applications, as the demand is appearing to be on pause for cases where funds are used for the nicer things, our enquiries show that borrowers are keen to release funds but not at any cost. Those using lifetime mortgages for needs based reasons are still taking the plunge but are plagued by loan to value restrictions and down valuations, which seem to have hampered the market.