Though retirement interest-only (RIO) mortgages have been labelled a “welcome addition” to the later life lending space, a number of trade body representatives have argued there should be a closer alignment between the products and equity release options so consumers receive more holistic advice.
Speaking at yesterday’s FSE London Exhibition, Paul Broadhead of the BSA highlighted how a number of its members were already offering RIO mortgages but given they are more closely aligned to the mainstream mortgage market, and lifetime mortgages have different requirements for advisers in terms of authorisation and qualification, urged that both industries needed to be much closer together.
“There’s not been a great deal of innovation in the retirement lending space for a number of years,” he said. “So, RIOs are a welcome addition but are starting from a low base. We do however need to bring the RIO and equity release industries much closer together. There is a need for more innovation and I think we will see innovation in the future.”
Furthermore, Donna Bathgate of the Equity Release Council stated that any consideration of later life lending product options had to be shelved in terms of advice, but added that the council was “very supportive” of RIOs coming to market.
Also commenting, UK Finance director of mortgages Jackie Bennett added: “As the market becomes more complex, the customer needs quality advice.
“This is why holistic advice is so important but at the moment there’s no one place where consumers can go and get that advice. In terms of both RIO and lifetime mortgages, we do need to join these markets together a bit more seriously.”
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