The value of later life lending loans rose by 20.5% year-on-year in Q2, totalling £6.2bn, UK Finance has revealed.

The banking and financial services trade association’s latest later life mortgage lending update found that there were 37,300 new loans advanced to borrowers in Q2, marking a 13.4% year-on-year increase.

While there was a significant increase in the value of later life lending volumes, UK Finance said the annual comparison is inflated due to the dip in lending in Q2 2025, following the rush to beat stamp duty changes from April 2025 onwards.

Lifetime mortgage advances dropped by 1.7% year-on-year in Q2 to 5,730, despite increasing by 8% quarter-on-quarter. The value of this lending was £490m.

There were 323 retirement interest-only (RIO) mortgages advanced in Q2, up 5.9% year-on-year, with the value increasing by 24% to £31m.

Across this period, residential later life loans represented 7.8% of all residential loans, while buy-to-let (BTL) later life loans represented 20.6% of all BTL loans in Q2.

Sales and marketing director at Phoebus Software, Richard Pike, said the latest data points to a later life lending market that "continues to diversify".

He said: "For lenders, this shift matters operationally as much as it does commercially. A servicing book built primarily around lifetime mortgages looks very different to one that has to accommodate RIO, term interest-only, and standard repayment products side by side. As borrower demand spreads across a wider range of later life products, lenders need servicing infrastructure that can flex with that complexity, rather than being built for a single product type.

“Automating servicing processes across product types also allows lenders to manage complexity without a corresponding rise in operational overheads – helping lenders to keep costs down.

"The lenders best placed to capture growth in the later life market will be those whose back-office systems can keep pace with a genuinely multi-product later life offering — without that complexity translating into higher operating costs."

Later life proposition manager at Mortgage Advice Bureau, Levi Culshaw, concluded: "We're increasingly seeing customers approach later life lending with a clear purpose in mind - whether that's boosting retirement income, supporting their family, or even ticking off that once-in-a-lifetime trip. This shift in mindset, alongside greater product flexibility and competitive rates, is likely behind the renewed momentum we're seeing in the data.

"That said, growth in the market doesn't mean the myths have gone away. Many people still rule out later life lending because they wrongly believe it means losing their home, leaving family with debt, or having no inheritance to pass on. The reality is far more flexible than that outdated reputation suggests, and speaking to a specialist adviser is the best way to understand what's genuinely possible for your individual circumstances."

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