The value of later life lending was up nearly 25% in the third quarter of 2025 compared with the same time last year demonstrating a ‘firm commitment’ from lenders to the over 55’s who have historically been underserved.
The comments from Mary-Lou Press, President of NAEA Propertymark come as UK Finance revealed 39,950 new loans advanced to older borrowers in the third quarter of this year with a total value of £6.5bn, which was up 24.7 per cent compared with the same quarter a year previously. The total number of new loans was up 18.4% year on year.
Press commented
“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.
“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.”
There were 335 retirement interest only mortgages advanced in Q3, up 11.7 per cent year on year. The value of this lending was £30m, which was up 11.1 per cent per cent compared with the same quarter a year previously. Residential Later Life loans in Q3 represent 7.84 per cent of all residential loans. BTL Later Life loans in Q3 represent 21.74 per cent of all BTL loans.
The data represents a ‘massive opportunity for mainstream mortgage brokers’ said Will Hale CEO of Key Advice & Air; an opportunity they are however failing to grasp:
“Later life mortgage lending was worth £6.5 billion in the third quarter of this year – on the face of it an impressive increase of nearly 25% compared with the same period last year.
“But the devil is in the detail – total lifetime mortgage lending was up just 4% over the same period while retirement interest only mortgage lending was up only 11% over the previous year.
“The later life lending market is growing strongly and represents a major opportunity for all advisers but the concern is that mainstream brokers are not aware of all the options now available and their customers are not always receiving the most suitable outcomes.“Later life lending products, including lifetime mortgages, have evolved to provide flexibility around income and capital needs and are relevant to all over-55s homeowners. Specialist equity release advisers are adapting their processes to ensure a holistic perspective but a more sophisticated approach to affordability in this sector is needed from all advisers. For all borrowers over the age of 55 assessing income and expenditure in detail is required not just to determine product eligibility but to inform the optimal repayment amount and how these payments may be best phased, balancing cost of borrowing and lifestyle objectives. Modern lifetime mortgages include options where interest can be served in full or in part, paid monthly or through ad hoc repayments and where the interest rate applied can vary according to payment amount and term.
“This can be a complex area for those not regularly advising in this market but support is available through platforms such as Air and through lender partners. What is clear from the data is that the customer need in this area is growing and mortgage advisers – and wealth advisers as well – need to ensure they are either equipped to advise on all later life lending options or have referral relationships in place with trusted specialists.”
The introduction of the so-called ‘Mansion Tax’ in the budget last week will see an annual ‘high value council tax surcharge’ of £2,500 for properties worth between £2-5 million and £7,500 for properties worth over £5 million, collected through the council tax system. The result of which will see later life lending continue its upward trajectory according to Simon Webb, managing director of capital markets and finance at LiveMore, who added the mansion tax would ‘hit older homeowners considerably, leaving those who are asset-rich but cash-poor with significant outgoings. Plus, a continued freeze on income tax thresholds, will result in an ever-greater number of pensioners paying income tax on their hard-earned pension pots.’
“For more and more older people, releasing funds from their home will be the best way to enjoy a stress free, supported retirement without moving. So, it’s never been more important for brokers to be aware of the options available to those looking for a later life lending product. While equity release may be the best option for some customers, a RIO mortgage, interest-only product or lifetime mortgage may work better for others.”
