One of the most striking aspects of the later life lending market today is that the biggest opportunity sitting within many client conversations is also the one that is most frequently overlooked. Advisers routinely spend time analysing income, pensions, savings and affordability, yet the largest asset many older customers hold, their home, often remains outside the centre of the financial discussion.
This is not because advisers are unwilling to consider it, but because housing wealth has traditionally been treated as the place a client lives rather than as part of the financial toolkit that supports later life planning. That mindset is understandable when viewed through the lens of how the mortgage market developed over many decades, but it is becoming increasingly difficult to sustain when the numbers behind housing wealth and later life borrowing are examined more closely.
Across the UK there is an estimated £5.7 trillion of equity held within owner-occupied homes, with around £3.7 trillion of that wealth sitting with homeowners aged over 55. At the same time, more than £25 billion is lent each year to borrowers in this age group, yet less than 1% of that lending is in RIOs and less than 10% takes the form of lifetime mortgages, meaning more the vast majority continues to sit within traditional mainstream mortgage products.
Those figures highlight a disconnect between where wealth sits and how the mortgage market continues to operate, and they explain why we need to address any sort of housing wealth ‘blind spot’.
Why housing wealth still sits outside many advice conversations
For many advisers, the home is simply not part of the financial plan, because it has historically been seen as separate from retirement planning and separate from investment discussions. The result is that housing wealth can remain just outside the frame of reference when advice conversations take place, even when it could provide an appropriate solution to the client’s needs.
This can lead to a range of issues that do not stem from poor advice but from incomplete conversations. Clients may reach dead ends with mainstream lending options, advisers may feel they have to make unsuitable products work, and sometimes options which are available are not discussed or overlooked.
In the context of Consumer Duty and an existing focus on customer outcomes, the risk here is not simply commercial, but regulatory. When housing wealth is excluded from the discussion entirely, there is a growing question about whether customers are truly being made aware of the options that could help them meet their objectives.
The three forces pushing later life lending into the mainstream
In that context, the later life lending shift from niche to norm is not being driven by a single factor but by three forces that are increasingly aligning with one another.
The first is customer need. People are living longer, working later, and managing increasingly complex financial lives that do not always follow the neat retirement patterns that earlier mortgage rules assumed. Housing wealth therefore becomes a more central part of how many households fund later life, support family members or manage income changes.
The second force is the regulatory focus. The FCA has made it clear that improving outcomes for older borrowers is a priority area, and its recent utterances, and ongoing work, reflects a desire to understand why the later life lending market is not already larger given the scale of housing wealth available to customers.
The third driver is the commercial opportunity for advisers. Everyday mortgage professionals speak to clients over the age of 55 whose circumstances may require solutions that include their housing wealth, yet many of those opportunities remain unrealised simply because the conversation never moves in that direction.
When those three pillars of customer need, regulatory expectation and commercial opportunity come together, the case for later life lending become more of the norm is increasingly compelling.
The role of referral and collaboration
Importantly, this shift does not mean that every adviser must become a specialist in later life lending. What it does mean is that advisers should be able to recognise when housing wealth may play a role in the solution and ensure the client is able to explore those options appropriately.
For many firms the most practical way to achieve this is through strong referral relationships with a later life lending specialist who can assess the suitability of those options while maintaining the adviser’s relationship with the client.
This collaborative approach benefits everyone involved. Clients gain access to a broader range of solutions that reflect their real financial position, mainstream advisers maintain trust and continuity with their customers, and specialists can focus on delivering the expertise required to support more complex later life cases.
Recognising the opportunity in front of us
Later life lending is often described as an emerging opportunity, but in reality, the opportunity is already present within the conversations advisers have every day with older clients. The home is already part of those discussions whether it is recognised as such or not, because it represents the largest store of wealth many households possess.
The advisers who begin to see housing wealth as part of the wider financial picture rather than as something separate from it will be the ones better positioned. That shift does not require advisers to change everything about the way they operate, but it does require a willingness to broaden the frame of the conversation so that the home is considered alongside income, pensions and other assets when clients are planning for later life.
