New figures have been released that show a drop in the number of people taking out later life loans, which are designed to help us make the most of our homes in retirement.
The data comes from UK Finance, which keeps track of how much money is being loaned out. They found that in the last quarter (April to June 2024), there were 5,610 new lifetime mortgages taken out, a 16.9% drop compared to the same time last year. This means that fewer people are choosing to use their homes to get some extra cash.
The total value of these loans also dropped by 6% compared to last year, reaching £470 million.
Interest-Only Mortgages on the Rise
While lifetime mortgages are down, there was good news for retirement interest-only mortgages. This type of loan lets you pay off the interest each month, but you only have to pay back the main loan when you die or move out. These loans saw a jump in popularity, with 23% more people taking them out compared to last year. The total value of these loans also went up by 15.4% to £30 million.
Experts Worry About the Trend
Some experts are concerned about the drop in lifetime mortgages. Simon Webb, from Livemore, explained that this could mean that older people are having a hard time finding the money they need to live comfortably in their later years. He worries that many people might not even know that these loans are available, meaning they could be missing out on important financial help.
But There’s Some Good News Too
Richard Pike from Phoebus, another company that offers retirement loans, is more optimistic. He points out that while the numbers for this quarter were down, they were actually better than the previous quarter. This suggests that the market could be on its way back up.
He also believes that lower interest rates and better deals will make retirement loans more appealing in the future.
What Does This Mean For You?
These changes in the retirement loan market are important for anyone approaching retirement or already in their later years. It’s worth considering your options and finding out if these loans could be right for you. Make sure you get independent financial advice to make the best decisions for your situation.