Mortgage lending to borrowers aged over 55 increased in the second quarter, although the annual comparison was boosted by a slowdown following last year’s stamp duty rush.
UK Finance figures show that 37,300 new loans were advanced to older borrowers during the quarter, an increase of 13.4% from the same period last year.
The value of lending rose by 20.5% to £6.2 billion. However, the year-on-year figures compare with a dip in activity during the second quarter of 2025, after borrowers brought transactions forward to beat stamp duty changes introduced that April.
There were 5,730 new lifetime mortgages advanced during the period, down by 1.7% year on year but 8% higher than in the first quarter. Lending totalled £490 million.
Retirement interest-only mortgage volumes rose by 5.9% year on year to 323, while the value advanced increased by 24% to £31 million.
Residential later-life loans accounted for 7.8% of all residential loans during the quarter. Later-life buy-to-let lending represented 20.6% of all buy-to-let loans.
CONTINUING TO EVOLVE
Jim Boyd, chief executive of the Equity Release Council, said: “Today’s figures show the later life lending market continuing to evolve as housing wealth becomes an increasingly important part of retirement planning.
“The 8% quarterly increase in new lifetime mortgages, alongside growth in retirement interest-only lending, reflects the range of options available to older borrowers as they look across their assets to support their financial needs in later life.
“The FCA’s recognition of later life lending as a potential fourth pillar of retirement funding, alongside pensions, savings and investments, reflects the reality that people are increasingly looking across a wider range of assets to support their financial needs in later life.”
Boyd added: “This is about more than market growth. It is about ensuring consumers can access the right guidance and advice to make informed decisions about all their assets.
“With the Pensions Commission highlighting the scale of retirement inadequacy and Fairer Finance modelling that 51% of households aged 60 and over could benefit from accessing housing wealth by 2040, the need for a more joined-up approach is becoming harder and harder to ignore.
“The industry now has an opportunity to build on stronger standards, greater product flexibility and the FCA’s fourth-pillar vision to deliver good consumer outcomes at scale.”
ADVICE GAP
Will Hale, chief executive of later-life lending platform Air, said: “The thing that leaps off the page in this latest lending data is the stark gap between the number of over-55s taking out a residential mortgage and those taking out a lifetime mortgage.
“We have a long-standing advice gap in the UK when it comes to specialist later life lending and I’d argue that it is leading to poorer outcomes for many borrowers, particularly those in or preparing for retirement. Many of these customers still have an existing mortgage, carry other debt, have low levels of pension savings and face continued cost of living pressures.
“Taking a holistic view of needs and circumstances both now and into the future, alongside an understanding of the innovation we have seen in the later life lending product landscape, it can’t be right that the most suitable option for such a significant percentage of those over-55 is defaulting to a product transfer or a remortgage to another mainstream lender.
“Much of that is down to the fact that, as an industry, we are far too siloed: of the 35,000 UK advisers who hold mortgage permissions, only around 6,000 can also advise on equity release and we estimate that just 3,000 of these have recommended at least one lifetime mortgage in the last 12 months.
“It’s also the case that many borrowers, and advisers, for that matter, are unaware of the options available or still hold outdated views of equity release. The reality is that modern lifetime mortgages are incredibly flexible, allowing borrowers to service all, some or none of the interest, with rates that are fixed for life and with protections such as certainty of tenure and a no negative equity guarantee built in – some also come with zero early repayment charges.
“But if advisers aren’t even considering them as an option, borrowers will continue to be left in the dark and fail to access solutions that could be ideal for their circumstances.
“This issue is pressing given we have a rapidly ageing population who will increasingly need to tap into their housing wealth to fund retirement. It’s clear the FCA wants lifetime mortgages, and later life lending products more broadly, to play a greater role in supporting older customers enjoy a more comfortable and/or fulfilling later life – whilst at the same time helping address broader societal challenges around economic growth and pressure on public finances.
“Therefore, from both a customer outcome and commercial opportunity lens, advisers should be looking at their own processes now and developing a later life proposition sooner rather than later.
“You don’t need to become a specialist overnight – you can still serve your clients well by referring them to one. As we always say: write it, refer it, just don’t ignore it.”
CALL FOR SIGNPOSTING
Dave Harris, chief executive of equity release lender more2life, said: “Today’s later life lending figures from UK Finance reinforce our call to make it mandatory to signpost all later life lending options, including equity release, to all later life borrowers. In Q2, just 5,730 borrowers took out a lifetime mortgage, with 37,300 loans in total to older borrowers over the quarter.
“Against a backdrop of 15 million people in the UK undersaving for retirement, that number should be far higher than it is.
“Lenders carry just as much responsibility here as advisers. Mainstream lenders sit at the heart of the customer journey too, and when a client reaches the end of a fixed rate, they should be pointing them towards the full range of options, not just a product transfer.
“Recent research from Fairer Finance found that seven in ten over-55 homeowners have heard of equity release, but only 13% have ever seriously considered it.
“If we were to collectively work together as industry to widen knowledge and understanding among both consumers and advisers, that figure would be a lot higher, and far more people would come away with a solution that could make a significant difference to their lives in retirement.
“We’re clear that with the right regulatory framework in place, the lifetime mortgage market has the potential to live up to the FCA’s billing as the fourth retirement pillar. But more importantly, it would lead to much better outcomes for those who need access to capital in later life.”
Jon Hall, group chief commercial officer at OSB Group, said: “37,300 later life loans advanced in Q2, up 13.4% year on year, is a welcome sign that the softening we saw earlier in the year may be starting to ease, though one quarter doesn’t make a trend.
“Volumes are up, though partly against a soft comparator, with Q2 last year marking the post-stamp-duty trough.
“It’s encouraging to see lifetime mortgage volumes up 8% on Q1, even if they remain down slightly year on year, likely borrowers acting on their own timing, whether a life event, a change in circumstances, or simply having taken the time to weigh up their options, rather than any single external trigger.
“Retirement interest-only lending continues to perform steadily too, up 5.9% year on year, underlining that older borrowers are weighing up the full range of products available to them rather than defaulting to any one option.
“Both residential and buy-to-let later life loans slipped slightly as a share of their respective markets this quarter, down to 7.8% and 20.6%, a reminder that later life lending is growing broadly in line with, rather than faster than, the wider mortgage market right now.
“Whatever direction someone’s later-life borrowing takes them, whether that’s downsizing, releasing equity, or simply managing cash flow into retirement, specialist advice matters more than ever.
“These are rarely straightforward decisions, and brokers who understand the full range of later life products are best placed to help clients find the right fit.”
