"Better understanding of the choices available helps ensure more customers are matched with the right solution for their individual needs and retirement goals."
- Dave Harris - more2life
Customer data from more2life has revealed that almost two-thirds of equity release borrowers who commit to paying some or all of the interest on their loans to avoid it rolling up are aged under 70.
In the first nine months of the year, under-70s made up 63.6% of its interest reward customers. Among standard lifetime mortgage customers where the interest rolls up, they made up 49.9%.
Borrowers aged 60-64 represented the largest single age group among interest reward customers, accounting for 25.9% of all cases, while customers aged 55-59 also made up a greater proportion of interest reward lending than standard lifetime mortgage borrowing.
More2life says the figures suggest younger equity release borrowers are most likely to choose to pay some of the interest on their loan to protect the equity in their property.
Interest reward products are designed to help customers secure reductions to their interest rate through qualifying repayments, helping to reduce the long-term cost of borrowing.
By limiting the impact of interest over time, the products also aim to help customers retain more equity within their homes, creating greater flexibility to respond to changing circumstances throughout retirement.
The lender believes the data reflects a broader shift within the market, with advisers increasingly helping customers consider a wider range of solutions designed to meet differing retirement objectives.
Dave Harris, CEO of more2life, said: "The later life lending conversation is evolving, and while lifetime mortgages were historically often viewed as a solution that customers considered relatively late in retirement, we’re seeing homeowners engage with advisers much earlier and take a far more proactive approach to planning.
"The fact that interest reward products are attracting a significantly younger customer base suggests many borrowers want to stay flexible while also taking practical steps to manage the long-term cost of borrowing.
"Someone who takes out a lifetime mortgage at 60 could have it for 25 or 30 years, so the way interest builds up makes a big difference to what’s left at the end. We’re also living in a time where many people in their late 50s and 60s are still working and can put some of that income towards the interest.
"As a lender, we're committed to ensuring advisers have access to a broad range of solutions capable of supporting different customer needs and circumstances. We offer the widest range of interest reward products in the market because we recognise that no two customers are the same. Some customers want to prioritise preserving equity, others want additional retirement income, and many are trying to balance multiple objectives simultaneously.
"Just as importantly, we're committed to continuing to drive awareness of these options among advisers and consumers alike. Better understanding of the choices available helps ensure more customers are matched with the right solution for their individual needs and retirement goals."
