Later life mortgage lending down 7% after stamp duty holiday: UK Finance

Later life mortgage lending is down by 7% in Q3 compared to the previous quarter, according to new figures from UK Finance.

Related topics:  Later Life,  Mortgages
Rozi Jones
29th November 2021
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"There was a slight rise in lending to those aged over 70 as people sought to release equity in their property rather than moving home."

There were 44,130 new later life mortgages taken out in Q3, with total lending in the quarter of £6.46 billion. Despite decreasing on a quarterly basis, the figure marks a 6% increase compared with volumes a year earlier.

UK Finance says the quarterly reduction was a result of declines in the number of mortgages taken out by those aged between 55 and 69, which reflects lower house purchase volumes in the wider housing market, coincident with the unwinding of the stamp duty holiday.

Lending to older borrowers (those aged over 70) was stable, as these borrowers access the market primarily through products that are not related to house purchase (e.g. equity release products).

Retirement interest-nly (RIO) mortgages, which were launched in 2018, started to grow in popularity in 2021 as more borrowers entered the market. Volumes are low compared to other later life products which is due in part to challenges for many borrowers in meeting the affordability requirements for a RIO mortgage. Lenders are providing these products where a lifetime mortgage may not be the best fit for the borrower (e.g. when the customer is looking to borrower at slightly higher LTVs).

Lifetime mortgage volumes have remained modestly lower than prior to the Covid-19 pandemic, but this reduction is expected to be temporary as the uncertainty driven by the pandemic subsides.

Charles Roe, director of mortgages at UK Finance, said: “Following the end of the stamp duty holiday, mortgage lending to over 55s declined seven per cent in Q3 compared to the previous quarter, mirroring the wider market. However, there was a slight rise in lending to those aged over 70 as people sought to release equity in their property rather than moving home.

“Our focus on retirement interest-only mortgages shows they have grown in popularity since their launch in 2018. These products provide a good alternative for customers where a lifetime mortgage may not be the best fit, however, take up is lower than other later life products due to affordability.”

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