The equity release industry has responded positively to the FCA’s proposed reintroduction of interest-only retirement mortgages.
Speaking at Financial Services Expo London in Old Billingsgate today, Adam Carnall of Age Partnership, Dean Mirfin of Key Retirement, Marie Catch of Legal & General, Steve Cox of Hodge Lifetime and Claire Rankin of Shawbrook were on a panel discussing the FCA plans.
Catch said: “We think it’s a really good opportunity and will help with innovation in products going forward.
“It would actually give customers more flexibility and choice and you allow them to have that affordability to pay.
“We’re hoping lenders will adopt that strategy.”
Cox said Hodge has had an interest-only mortgage for the past 12 months and is very comfortable with using sale of property and downsizing as an exit route.
Rankin meanwhile welcomed such “innovations”.
Carnall seemed ambivalent on whether the plans are good for the market. He said: “It potentially could have an impact on the demand for equity release if it does proceed.”
But he added: “It could allow some lenders and building societies potentially to move clients in volume without advising onto an alternative product, which could be a danger.”
He went on to say the real priority should be helping later life customers understand all their potential solutions.
Mirfin wasn’t worried about the development.
He said: “We genuinely don’t see it as a threat or an issue for us. There is ultimately amongst a lot of lenders a nervousness about sale of property where you’ve got a fixed term product.
“This look of reclassifying retirement mortgages is a really important step. What underlies that though is ultimately they’ve still got to be able to afford to make payments.
“What we are going to see is this is not going to be a panacea. It will help those with affordability.”
The panel were asked about what else they want to see from the FCA’s Ageing Population Strategy due later this autumn.
Steve Cox called for better consumer awareness of product choice and Adam Carnall said he wanted more collaboration between the industry and regulator.
Marie Catch called for more consumer education and for the industry to come together, as she said there are currently so many silos with regulators, lenders and brokers all seperate from one another.
Dean Mirfin called for older people to have access to credit outside of equity release, as currently he said a number of older people seek equity release for tiny sums which should be provided by other means.