It's all just Mortgage Advice after all

The financial landscape for older homeowners is undergoing a seismic shift. Once a niche market, equity release has matured into a broader category of "Later Life Lending," signalling a crucial change in how advisers and consumers alike view borrowing in retirement. But as these changes unfold, one thing has become clear: equity release advice as a distinct category is redundant. Later Life Lending advice has emerged, but is already heading the same way as lenders further widen their criteria and expand the product options for older borrower. I see a future where advisers are simply advising on the range of products available, regardless of the age of the borrower. At its core, it's all just mortgage advice after all.

The Rise of Later Life Lending

According to the Equity Release Council, over ￡6.2 billion of property wealth was unlocked by homeowners aged 55 and over in 2022, a record high. While impressive, this dropped back to ￡2.6 billion in 2023 and 2024 looks similar in terms of volume. However, products have evolved rapidly with the introduction of Payment Term Lifetime Mortgages and other variants encouraging borrowers to make payments. Alongside the rise in the range of equity release products, the demand for later life lending solutions has surged, encompassing retirement interest-only mortgages (RIOs), standard mortgages for older borrowers, and hybrid products. Lenders have raised or removed age limits, expanded their affordability criteria, and open the door for more 'normal' mortgages to be taken to age 90 and beyond. UK Finance report the value of Later Life lending was ￡5.2bn in Q3 2024, which is an increase of 9.7% compared with the same quarter last year. This puts it on track for a ￡20bn market, and with our aging population this can only grow.

This growth and convergence of options means that advisers must now approach later life borrowing with a more holistic perspective. Instead of pigeonholing clients into equity release solutions, they need to evaluate all lending options, considering affordability, suitability, and long-term implications.

Why "Equity Release Advice" Is Dead

Equity release has historically been marketed and advised on as a stand-alone product, separate from other forms of lending. However, this distinction no longer reflects reality. In practice, equity release is just another tool in a comprehensive lending toolkit. Here’s why:

?1. Blurring Product Lines:

Many modern equity release products (lifetime mortgages) now offer features such as voluntary repayments and interest servicing, which resemble those of traditional mortgages. This overlap has eroded the boundaries between equity release and other lending solutions.

?2. Regulatory pressure:

Both equity release and RIO mortgages fall under the Financial Conduct Authority (FCA) regulation. Consumer Duty requires advisers to consider ALL options available to consumers. Advisers are required to be qualified to provide mortgage advice, and many now hold additional equity release qualifications. This has led to a growing cohort of advisers equipped to consider all later life borrowing options, rendering equity release advice a subset of broader mortgage advice.

?3. Consumer Trends:

Homeowners are becoming savvier about their options. Research by Key Partnerships shows that 56% of over-55s are open to using property wealth to fund their retirement, but many want cost effective, flexible solutions that equity release alone may not provide. Consumers are increasingly seeking advice on managing their entire financial picture, not just unlocking cash.

The Evolution of Mortgage Advice

Mortgage advice has traditionally focused on younger borrowers with straightforward goals: buy a house, remortgage, or move up the property ladder. However, the gap between these events and 'Later Life' has narrowed, and many borrowers are taking their mortgage term well beyond retirement. Later life lending requires advisers to think differently. Borrowers in their 60s, 70s, or even 80s may need solutions that also take into account covering care costs, helping younger family members, or simply maintaining their quality of life in retirement. As an adviser you therefore need to be able to take into consideration a wider set of client needs and a broader set of products.

?Key considerations for later life lending include:

• Affordability Assessments: For RIOs and standard mortgages, advisers must assess income sources such as pensions, investments, or rental income.
• Longevity Planning: Lifetime mortgages are designed to last for life, but advisers must also consider how the product will impact the borrower’s estate and inheritance planning.
• Flexibility: Products that offer payment holidays, downsizing protection, or early repayment options are increasingly in demand.

?Data Driving the Shift

?The data reflects the growing complexity of later life lending:

• ?Over-55 Borrowers: The Financial Times reported in 2023 that 39% of all new mortgage lending was to borrowers over 55, a sharp increase compared to previous decades.
• Hybrid Products: Research by Moneyfacts shows that hybrid mortgage products—offering features like repayment flexibility—have grown by 12% year-on-year.
• Consumer Confidence: The Equity Release Council notes that satisfaction rates among equity release customers exceed 90%, driven by the diversification and improved transparency of later life products.

A Unified Approach

For advisers, this evolution presents a clear mandate: later life lending advice must be treated as mortgage advice. The adviser’s role is to guide clients through all their options, weighing the pros and cons of each product against the client’s unique circumstances.

?This unified approach benefits consumers by ensuring they receive impartial, comprehensive advice that meets their needs, rather than being funnelled into a specific product category.

Conclusion

Today’s market demands a broader perspective, where equity release is just one of many tools in the mortgage adviser's toolkit. Advisers who embrace this change will be better positioned to serve their clients, offering tailored solutions that reflect the realities of borrowing beyond retirement. Looking ahead, this evolution will continue until mortgage advice is just mortgage advice, regardless of age.

Mortgage advice, not Later Life Lending advice, is the future.

Photo by Artful Homes on Unsplash