More 2 Life has claimed that older borrowers want to see age limits on lending scrapped as the current pension climate highlights the need for new solutions to maximise retirement income.
Its nationwide study found 37% of five over-55s believe there should be no maximum ages imposed by lenders while another 47% believe lenders should base decisions on borrowers’ ability to pay.
The research suggests strong demand for new borrowing solutions specifically aimed at the retired; two out of three over-55s would like to see regulated lenders launching loans and credit cards for the retired.
More 2 Life is considering launching its own solutions and has commissioned a report into the growing issue of retirement lending – Lending in Retirement: The way ahead for customers and advisers.
The report forecasts strong growth for equity release and other retirement lending solutions as part of a “seismic shift in the way people fund their retirement”.
Research shows there is strong potential demand to borrow in retirement; nearly two out of three (63%) of over-55s say they would welcome the ability to borrow.
Dave Harris, managing director at More 2 Life, said: “Pensioners and those in the run-up to retirement need flexibility and are entirely capable of making informed and sensible decisions as long as there are lenders willing to lend.
“Regulators have quite rightly focused on the need to stop irresponsible lending but that is having a chilling effect on lending to responsible borrowers and even those in their 40s as recent FOS rulings have shown.
“Retirement lending will be a growth area in the future as innovation in retirement income planning develops and it is one that the industry as a whole should be looking at now – one of the drivers for that growth will be the huge number of interest-only mortgages due to mature over the next 15 years or so where the borrower has no means of fully repaying their debt.”
The research shows 17% of over-65s expect to borrow or have already borrowed money in retirement. Figures from the FCA suggest there will be 40,000 interest-only mortgages maturing each year between 2017 and 2032 where the borrower is aged 65 or above.
