Later life lending is a growing trend
The later life lending market has been predicted to double in size over the next decade, surpassing a total market value of over £500bn – a staggering figure, to say the least.
This has stemmed from recent research carried out by the Centre for Economics and Business Research. Later life lending is predicted to receive an 85% increase from 2019-2029 to a total of £548bn. Which then raises the question:
Why has this come about?
There are a few factors out there that have influenced these predictions, the main ones being:
- The increase in older households
- Rising house prices leading to higher mortgage values
- Consumers are becoming increasingly comfortable using unsecured credit
Analysis also suggests that the 64-74s have the second lowest amount of net yearly savings, sitting at £3,100 after ingoings and outgoings are taken into account. For those aged 50-64, the figure sits at £8,100 and £3,050 for those under 30. With a typical fixed income and just £3,100 savings a year, this might raise worries for those in the 64-74 bracket as members of older generations are particularly vulnerable to sudden unexpected costs or price increases.
Almost half of this age group (48%) believed that they would struggle to deal with an unexpected bill of £5,000 and 35% said that their expenditure exceeds their income.
A solution to consider?
One of the potential solutions to this growing disparity in later life savings is to consider the value of releasing equity from your home. We are seeing an increase in the flexibility of lenders as well as a wider choice of products that are designed to cater to today’s retirement lending market.
Equity release can provide a unique solution to funding later life. You can find out more about it in one of our previous articles.
You may be looking to improve your mortgage deal or use the money in your home to borrow more money for different purposes. You may be mortgage-free and looking to raise capital for lifestyle reasons, such as gifting some of the equity in your home to younger members of your family to help them get on the property ladder.
In 2017, the Financial Conduct Authority found that 39% of borrowers who took out a mortgage that year would be aged 65 or over when their mortgage matures, a 22% increase since 2012. The average mortgage term is also increasing, with 34% of all mortgages now longer than 30 years.
At Questa we have a team of equity release specialists who can help you to select the most favourable products for your situation. If you’re interested in taking out an equity release product or would like more information surrounding equity release, feel free to get in contact.
This is a lifetime mortgage or home reversion scheme. To understand the features and risks, ask for a personalised illustration. In some circumstances, Questa may apply a fee. Any applicable fees would be disclosed before processing the application.