Later life lending. How the wealth we hold in our property is becoming an ever more vital resource

Retail Financial Services

06 October 2022

Bank and Brand Distribution of Retail Financial ServicesdistributionFinancial EducationInterestMortgagesPensionRetail Financial Services

Expert: Paula Hughes, Jayan Taank Facilitator: Tony Crane


  1. Financial pressures are growing across the whole of the UK. Interest only mortgages are continuing to mature without repayment vehicles – the chances are that lenders will again start converting borrowers to interest only, if economic conditions don’t improve
  2. A generation of ‘squeezed middle’ is growing – their children need help getting on to the property ladder, their parents need support with care
  3. The biggest challenge for the market is to move away from the perception that it is the product of last resort and into a place where everyone can consider it an option
  4. Education, education, education. People need to know what it can do
  5. Expanding distribution and tackling reputational issues is key



Average pension pot of £114,000 is not enough for most people to live the life they want in retirement.

Retirement is now considered outdated as a term – it suggests ‘old’ whereas consumers aren’t viewing themselves as old when they retire.

The average age of a first-time buyer is now 36 – meaning most won’t have repaid their mortgage before they consider retiring.

Older consumers are increasingly looking at inter-generational gifting, given the average age to receive inheritance is now 61.

Divorce continues to rise within the cohort – funded by the property. Converting homes into greener properties is also increasing.

There was a general view that it makes sense to include the property as a potential decumulation asset alongside pensions and investments - how and when this happens will be a key consideration.

There is belief that, under the Consumer Duty requirement, customers will be informed of their options, and lenders/advisers will be expected to consider Later Life Lending as part of the repayment discussion for end of term, interest only loans. 

Both FCA and Martin Lewis are encouraging firms (and consumers) to take a wider view on products/options when considering repaying an interest only mortgage or generating retirement income.

It is felt that outdated views and legacy issues from over 30 years ago are still having an impact on Equity Release becoming a mainstream option.

More advisers need to be qualified to sell equity release to ensure wider accessibility to consumers.

The main consumer objective is still to be mortgage free.

Changing the perception of equity release both inside and outside the industry is key. It was not known whether many customers know what ‘equity’ actually means.

We need to educate younger generations on equity release and how it can be used – this will help tackle any concerns families might have at a later date.

It was felt that the criticism of the market was often given without context or in isolation.

More awareness that a charge for advice is often not made on equity release.

Using equity release. to repay interest only mortgage will likely remain a key driver for the market.

Wealth managers should be considering equity release when looking at income shortfalls. At present they don’t need to do this if the scope of their advice doesn’t include equity release. Is that right? Will Consumer Duty force a change in that behaviour?

Paul Lewis has been very positive about equity release. on Radio 4 – this will help build confidence. But some advice firms still see equity release s a high-risk product with 100% advice checks, f2f only.

Key takeaways:

  • Consideration should be made about the impact Consumer Duty will have on a firm’s ability to avoid considering property assets as part of a retirement income discussion and repayment option for end of term interest only loans
  • 60% of consumers said they knew about equity release but that it ‘wasn’t for them’. It is likely that a large proportion of those will need it in the future though
  • Regulatory licence allowing advisers to ignore the use of property when discussing retirement plans is an issue – should this change?