Lending to older borrowers rose sharply in the third quarter, driven by continued demand from homeowners aged 55 and over who are extending mortgage terms or turning to specialist products to manage affordability pressures.
According to UK Finance, 39,950 new loans were advanced to later-life borrowers between July and September, an 18.4% increase on the same period last year.
The value of lending to this group rose even faster, up 24.7% to £6.5bn.
Lifetime mortgages – a form of equity release allowing older homeowners to borrow against their property without monthly repayments – also grew modestly.
GROWING DEMAND
Lenders advanced 6,040 new lifetime mortgages in Q3, up 3.4% year on year, with the value of this lending rising 3.9% to £530mn.
Demand for retirement interest-only (RIO) mortgages, a niche product where borrowers pay only the interest each month, continued to strengthen. There were 335 new RIO loans completed in the quarter, an 11.7% annual rise, with total lending reaching £30mn.
Later-life borrowers now account for a significant share of the wider mortgage market. UK Finance said residential later-life loans made up 7.84% of all new residential lending in Q3, while later-life buy-to-let loans represented 21.74% of all new buy-to-let advances.
Market analysts say the figures reflect both improved product availability and the widening financial pressures facing households.
LIFE COMPLEXITIES
Mary-Lou Press, President of NAEA Propertymark (National Association of Estate Agents), says: “It is positive to see many lenders demonstrating a firm commitment to those who may be aged 55 and over.
“In previous years, such demographics have typically been underserved with suitable mortgage products that are tailored to their needs.”
FLIP SIDE
But she adds: “However, there is a flip side to highlight, and that is openly talking about why there is increased demand within this specific age bracket.
“We are seeing ever growing complexities in life, such as cost-of-living concerns and the ability to put aside such sizeable sums of money needed for deposits.
“The reality is that the pressures many people face in their younger years are contributing more heavily towards not easily achieving a footing on the housing ladder until much later in life.”
