Later life lending dropped sharply in last quarter of 2023

mortgage lending

During the last three months of 2023, a total of 29,060 new loans were advanced to older borrowers, marking a 37.1% decline from the previous year

Mortgage lending to borrowers aged 55 and above dropped significantly in the last quarter of 2023, according to UK Finance’s quarterly report on later life mortgage lending.

During the last three months of 2023, a total of 29,060 new loans were advanced to older borrowers, marking a 37.1% decline from the previous year.

The total value of these loans amounted to £4.1 billion, representing a 42.4% drop compared to the same quarter in the previous year.

According to the UK Finance quarterly insight, new lifetime mortgages saw a 40.1% year-on-year drop, with 6,710 loans advanced and a total value of £520 million. This figure is 57.4% lower from the same period a year earlier.

Retirement interest-only mortgages also experienced a decline, with only 255 new loans advanced, a 43.3% drop year on year. The value of these loans came to £26 million, 38.1% lower from the previous year’s quarter.

Residential later life loans in the fourth quarter accounted for 7.38% of all residential loans, while BTL later life loans represented 21.98% of all BTL loans.

The mortgage market continues to be especially challenging for borrowers above the age of 55, said Arjan Verbeek, chief executive of digital mortgage lender Perenna. The drop in mortgage lending to this demographic demonstrates that the mortgage market is fundamentally ageist.

Simon Webb, MD of capital markets and finance at later life lender LiveMore, said the sharp decline in loans to older borrowers despite an ageing population and a rise of later life mortgage products available is “indicative of our still-turbulent market.”

When we see these types of figures it rings alarm bells about the potential increasing number of mortgage prisoners in the UK, Webb said. Interest-only mortgages can help mortgage prisoners who can’t meet affordability criteria as well as those with interest-only mortgages due to mature but who have no repayment plan in place. Without suitable products, these two groups of customers would otherwise have to sell up or pay very high interest rates.

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