Lending to older borrowers rose modestly in the second quarter of 2025 according to figures published yesterday by UK Finance.
A total of 33,130 new loans were advanced to customers over the age of 55 between April and June, up 0.5% on the same period last year. The value of this lending reached £5.2 billion, a year-on-year increase of 3%.
Specialist products accounted for a growing share of activity. Lifetime mortgages saw the strongest rise, with 5,830 loans completed in the quarter, 3.7% higher than a year ago. The value of this lending jumped by 10.6% to £520 million.
By contrast, demand for retirement interest-only mortgages softened. Just 305 new loans were taken out in Q2, down 2.6% on last year, with total lending falling 10.7% to £25 million.
INCREASING IMPORTANCE
Later life loans represented 7.95% of all residential mortgage advances in the quarter, while in the buy-to-let market, older borrowers accounted for 22.54% of loans.
UK Finance said the quarterly update highlights the “increasing importance” of the later life sector, as more borrowers extend their mortgage borrowing into retirement and demand for equity release products continues to expand.
BALANCE AND PERSPECTIVE
President of NAEA Propertymark (National Association of Estate Agents), says: “Any uplift in new loan advances and lending volume is a defined sign of consumer affordability within this age demographic.”
But she adds: “However, it is important to view this news with balance and perspective.
“While it is positive lenders are confident to better serve this age group than ever before, it can also be a case that tough decisions are being made by people who are finding affordability a challenge earlier in life and considering taking finance over longer periods than any point previously.
“Hopefully, the gradual easing of base rates will lead to more affordable mortgage products for all borrowers in due course. However, more work needs to be done to ease pressures for many, and that struggle is closely influenced by the current rate of inflation, which currently stands at almost double what the Bank of England have targeted.”
