Retirement lending set for growth and evolution
The over-55 specialist expected an “imminent revolution in the growing retirement lending sphere”, adding that older consumers are demanding not just equity release, but other forms of secured and unsecured lending from credit cards to personal loans.
more 2 life said advisers and providers currently have a “genuine opportunity” to take advantage of “a potentially massive market” – as more than three in five (61%) over-55s said they would like to borrow money in retirement.
There are 16,842 million over-55 households in the UK (28.2% of all households) with three in six (61%) holding wealth in excess of £250,000, more 2 life revealed.
The report read: “Lending in retirement will be a growth area as innovation in retirement income planning develops. It is one we should be looking at now.
“Retirement lending needs to be addressed and it is a real opportunity for advisers to demonstrate their experience and expertise by sourcing the best possible solutions for customers.
“The role of property wealth in retirement income planning – and the ability and need to borrow against it – needs to be included.
“Pensioners and those about to retire need flexibility and lenders should recognise that many of them are entirely capable of making informed and sensible decisions about borrowing.”
more 2 life said older people have been been “caught in the cross-fire” of the Mortgage Market Review as lending into retirement has tightened, meaning some borrowers have had to rely on more expensive forms of credit.
The baby boomer generation already rely on debt in retirement, as 57% of over-55s applied for credit in the past two years, while one in five 55 to 64 year olds said they don’t expect to be debt free by the time they reach retirement.
The number of households owned outright by over-65s stood at 4.7 million, collectively worth £861bn.
The report added: “The Mortgage Market Review – while entirely welcome in ensuring standards of best practice across the industry – has turned the spotlight on to lending into retirement.
“But it is not just mortgage lending – similar constraints are facing people looking for unsecured loans. The over-55s are most at risk but there are reports of people in their 40s facing issues with borrowing
“The risks of clamping down on lending into retirement are clear – if people cannot borrow from mainstream lenders they may have to turn to other sources and pay potentially inflated interest rates.”