Calls have been made for a more joined up way of providing financial advice to the UK’s growing population of older homeowners and borrowers.
Currently financial advisers offer expertise in either mortgages, pensions or investments – but rarely offer a holistic approach and advise on all three.
However, the growing number of people aged over-65s who have their assets tied up in their homes means property wealth as well as their pension pots should be considered together when planning their finances, said the Intermediary Mortgage Lenders Association (IMLA).
The trade association for mortgage lenders has published a report in which it has also raised concerns the fast pace of product innovation for the growing number of people borrowing into their retirement is could also put a strain in the current system for offering advice.
Rising mortgage debt amongst retirees
According to IMLA, the number of over-65 homeowners has increased by 52% over the last 20 years – this is nearly six times the UK average. It is also almost twice the growth rate of the 65 plus population.
The report points out this shift means homeowners aged over 55 now hold 69% of the UK’s housing equity and retirees’ mortgage debt is set to double by 2030.
What’s more, the report said, there were more than 40,000 interest-only loans held by over-65s which were due to mature before 2032. Many of these borrowers would need extended mortgage terms to stay in their homes during retirement.
With lifetime mortgage lending increasing by 29% annually since 2014, and products innovating rapidly to keep pace with these developments, financial advice must now evolve to meet these needs, the report said.
Kate Davies, executive director at IMLA, said: “Changing demographics and socioeconomic pressures mean it’s likely that later life lending will become a significant growth area for the mortgage industry. And, as more retirees seek to stay in their homes or unlock equity, product innovation will drive lending forward and make it a bigger component of financial planning in retirement.
“Our report finds that many retirees’ homes are worth as much or more than their pensions, and both elements need to be considered as part of a wider retirement plan.
“This creates challenges for those providing financial advice, many of who m will be expert in one area – pensions, investments or mortgages – but who will not necessarily have the qualifications or permissions required to advise across the spectrum.”
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