It’s too early to tell how much of an impact the Financial Conduct Authority’s retirement interest-only mortgage will have, a panel agreed at FSE Manchester today.
However they said lenders need to help those with maturing interest-only products now.
Gary Webster, head of partnerships at Equity Release Supermarket, said: “There’s £3bn worth of customers over 65 coming off interest-only. Its welcome news it’s here but we hope to see more changes soon.”
Paul Carter, chief executive at Pure Retirement, agreed that it’s too early to see how big an impact, if any, it’ll have.
He added: “It’s been too early to see how big an impact it has. For me it’s great that it’s bringing in awareness and fuelling more growth from lenders such as ourselves in terms of products.”
But Steve Cox, business development director at Hodge Lifetime, warned that these customers coming off interest-only need help from lenders now.
He said: “There’s an emerging problem of interest-only maturities, broken through a stalemate of lenders.
“I have a lot of sympathy what the high street can do for these customers. A lot of customers get to the end of their term and don’t want to downsize or may not have the capacity to pay back.
“These customers need help to get to an exit. The only sector that can facilitate that is the intermediary sector.”
He added that within the next few weeks Hodge Lifetime is going to launch a new retirement interest-only product.
Cox said: “I think these products will evolve over time. It’s another solution for advisers. It’s going to be a fully compliant product with the FCA guidelines but we don’t know how it’s going to be received. We look forward to feedback.”
Webster added: “It goes back to education and with education, not only for the consumer but for the advice industry, we will achieve better incomes.”