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Lending to older borrowers must improve

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04/12/2015
Trade body the Council of Mortgage Lenders, has called for improvements in how the industry and Government deals with lending into retirement and beyond
Lending to older borrowers must improve

The Council of Mortgage Lenders has outlined a range of calls to action for regulators, Government and the mortgage industry to improve the market for older consumers.

Many people want to borrow into retirement and beyond – including releasing equity from their properties – and this growing market is currently not well served.

In a new report looking at this sector of the lending market the trade body clearly shows how complex and interconnected the issues are when lending to older borrowers.

According to the CML the next steps for lenders include:

  • Continuing to work with the broker sector towards providing more seamless advice.
  • Looking at how pension freedoms are affecting the mortgage market – including whether access to pension pots is feeding through to some customers repaying their interest-only mortgages, for example.
  • Exploring the potential for a product that can flex between capital repayment and interest-only rollup over time.

The trade body has asked regulators to consider a range of issues, from encouraging a more holistic approach to advice, to changing the rules so that lifetime mortgages can be used as a repayment strategy on interest-only borrowing.

And it has called on HM Treasury to consider introducing tax relief on professional advice received at retirement, to encourage take-up.

Commenting on the work, CML director general Paul Smee said: “There is no silver bullet to address the complex issues involved in the housing and financial needs of older borrowers, but it is hugely significant that so many willing participants from across the mortgage industry and beyond are now collaborating to try to put this jigsaw together.”

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