Later life lending expected to play a bigger role in retirement income
The Financial Conduct Authority (FCA) has launched a market study into later life lending, which includes the role that equity release is playing in this sector.
The regulator says that older homeowners may increasingly turn to using their housing wealth to play a role in achieving financial security in the future. Both lifetime mortgages and retirement interest only mortgages (RIO) are expected to play a greater role in unlocking property wealth.
FCA Chief Executive Nikhil Rathi said: “For homeowners, choices around downsizing, equity release or later life borrowing can interact directly with how their pension savings are used.
“And as mortgage terms extend further into later life, and pensions savings gaps persist for some groups, housing wealth will play a larger role in supporting retirement living standards.
“Products like lifetime mortgages and retirement interest-only mortgages – currently more niche – may become more prominent parts of the retirement landscape.”
One of the issues the FCA’s market study will look at is whether the later life mortgage market “can and will develop in a way that meets consumers’ evolving needs, and what changes might be required”. The study will also look at the type of advice and support people need to navigate their way through the available options.
