New data from UK Finance has found that later life loans rose 18.4 per cent with 39,950 loans taken out in Quarter 3 (Q3).

The value of lending was £6.5 billion, which was up 24.7 per cent compared with the same quarter a year previously. There were 6,040 new lifetime mortgages advanced in Q3, up 3.4 per cent year on year. The value of this lending was £530mn, which was up 3.9 per cent compared with the same quarter a year previously. There were 335 retirement interest only mortgages advanced in Q3, up 11.7 per cent year on year. The value of this lending was £30mn, which was up 11.1 per cent per cent compared with the same quarter a year previously.

Residential Later Life loans in Q3 represent 7.84 per cent of all residential loans. BTL Later Life loans in Q3 represent 21.74 per cent of all BTL loans.

Simon Webb, Managing Director of capital markets and finance at LiveMore said “In light of the Chancellor’s budget announcement yesterday, we can expect to see later life lending continue on this upward trajectory. The highly anticipated ‘mansion tax’ will hit older homeowners considerably, leaving those who are asset-rich but cash-poor with significant outgoings. Plus, a continued freeze on income tax thresholds, will result in an ever-greater number of pensioners paying income tax on their hard-earned pension pots.

“For more and more older people, releasing funds from their home will be the best way to enjoy a stress free, supported retirement without moving. So, it’s never been more important for brokers to be aware of the options available to those looking for a later life lending product. While equity release may be the best option for some customers, a RIO mortgage, interest-only product or lifetime mortgage may work better for others. At LiveMore, we offer a full range of later life mortgage products, enabling older borrowers to free up funds with confidence and peace of mind.”

Dave Harris, CEO at more2life said “Today’s figures show strong growth across later life lending, with new loans to older borrowers up more than 18% by number and almost 25% by value in Q3. Lifetime mortgage lending also rose, but only by around 4%. That gap should not be ignored. It raises a clear question over whether enough older borrowers are being shown lifetime mortgages at the right stage of the advice process. These are modern products with features that can suit older clients far better than some mainstream loans, yet the take-up remains modest even as demand for later life borrowing rises at pace. After yesterday’s Budget confirmed higher tax pressure for many older homeowners, advisers must think carefully about how they are supporting these clients and whether they are offering the full range of solutions, including lifetime mortgages.

“The FCA’s Discussion Paper made the need for better access to later life options plain, and these figures underline why that point matters. Advisers are central to this. If older borrowers are being placed into mainstream products out of habit, or because lifetime mortgages are not being considered early enough, then we are not getting the most suitable outcomes. The demand is rising, the financial strain on older homeowners is growing, and the product set has never been stronger. Advisers must guide clients through the full list of options, and they must give lifetime mortgages proper attention. Anything less risks leaving older people with mainstream mortgage solutions that do not match their needs.”

Source: Credit Connect