Lending into retirement will get the solutions it needs only if the regulator and lenders work together as closely as possible
With the FCA rightly taking a greater interest in lending into retirement, this topic features highly on the agenda of many providers.
The regulator has warned that the number of people aged over 80 is set to more than double in the next 25 years.
As such, there will be growing demand for a wider range of flexible products based on matching ever-shifting requirements.
The question is: what do these requirements look like and how can the market provide adequate solutions?
There is not one simple answer. Research from the Council of Mortgage Lenders suggests that few homeowners intend to release housing wealth at retirement. It found just 4 per cent had definite plans to use their housing wealth to supplement pension income or finance large expenditures at or near retirement.
Additional research from More2Life revealed that 79 per cent of advisers had been unable, at some point, to find a retirement lending solution due to loan-to-values being too low or lending criteria being too restrictive.
Ten per cent of advisers said they had been unable to find a solution due to age restrictions, with clients either too old or too young – even though the average age of a client releasing housing equity is 65.
Lenders face a constant challenge to support all areas within the lending spectrum, from first-time buyers through to those nearing and into retirement. There are regulatory and risk boundaries to adhere to, as well as elements such as education, demand, eligibility and affordability.
Lending into retirement requires attention and the more closely together the regulator and lenders can work, the more likely it is this generation will have access to solutions that match these changing needs.
Bill McCabe is managing director, mortgages transformation, at Barclays