say Livemore and Perenna – Mortgage Strategy

The latest data on later life mortgage lending from UK Finance reveals there were 29,060 new loans advanced to older borrowers in Q4, down 37.1% year on year.

The value of this lending was £4.1bn, which was down 42.4% compared with the same quarter a year previously.

There were 6,710 new lifetime mortgages advanced in Q4, down 40.1% year on year. The value of this lending was £520mn, which was down 57.4% compared with the same quarter a year previously.

There were 255 retirement interest only mortgages advanced in Q4, down 43.3% year on year. The value of this lending was £26mn, which was down 38.1% compared with the same quarter a year previously.

Residential Later Life loans in Q4 represent 7.38% of all residential loans. BTL Later Life loans in Q4 represent 21.98% of all BTL loans.

Commenting on the latest numbers Livemore managing director of capital markets and finance Simon Webb expressed concern over loans to older borrowers.

“It is indicative of our still-turbulent market that, despite an ageing population and an increase of later life mortgage products available, we’re seeing this sharp decrease of 37% in loans to older borrowers in Q4 2023 compared to the same quarter in 2022. That said, borrowing was unusually high following the 23 September 2022 Stamp Duty Land Tax (SDLT) increase to thresholds, when the over-55s realised they could tap into the equity in their property”.

He added: “When we see these types of figures it rings alarm bells about the potential increasing number of mortgage prisoners in the UK.  Interest-only mortgages can help mortgage prisoners who can’t meet affordability criteria as well as those with interest only mortgages due to mature but have no repayment plan in place. Without suitable products, these two groups of customers would otherwise have to sell up or pay very high interest rates.”

Perenna chief executive Arjan Verbeek (pictured) also voiced concern over the latest figures. “The mortgage market continues to be particularly challenging for borrowers above the age of 55. The decline in mortgage lending to this demographic demonstrates that mortgage market is fundamentally ageist”.

He added: “These statistics fall in line with our own findings, in which 60% reported a lack of choice and mortgage products tailored to them and a third finding their mortgage restrictive because of their age. Concerns about mortgage affordability are particularly prevalent among later life borrowers, who often face end-of-term age-related restrictions from lenders when trying to remortgage or secure a new mortgage. The current market, dominated by short-term fixed teaser rates, does little support this demographic”.

Verbeek insisted homeowners over the age of 55 should not be inhibited by concerns about mortgage affordability or be forced to pursue less desirable alternatives, such as equity release or postponing retirement. “They should have solutions available to live the lives they desire and deserve. Retirement interest-only (RIO) mortgages can help to provide flexibility and certainty for over-55s, but to provide a real solution to this problem, structural change within the market is needed.”