Almost 80% of mortgage intermediaries expect lending into retirement to be the fastest growing segment in the specialist mortgage market over the next two years according to Paragon’s latest Financial Adviser Confidence Tracking (FACT) Index, based on interviews with almost 200 mortgage advisers.
Intermediaries say mortgages for the self-employed represent the mainstay of the specialist mortgage market today, making up almost one quarter (23%) of specialist lending cases in Q3 2018, followed by interest only (16%), complex income (13%) and high loan to value (LTV) cases at 12% of the total.
At the moment, lending into retirement accounts for a fairly consistent proportion of specialist cases at around one in ten (11%) but it’s in this area that intermediaries see the highest potential for future growth. However, intermediaries warn that further product enhancements will be needed if the market is to provide the solutions that customers really need. In particular, they highlight four areas for further attention: maximum age limits; diversity of acceptable income sources; availability of interest only products and choice of repayment strategies.
John Heron, director of Mortgages at Paragon said:“As mainstream lenders put greater focus on streamlining the mortgage process, the demand from customers with more complex requirements has continued to rise. We’ve already seen this with the self-employed and now intermediaries are giving us a clear signal that demand for later-life borrowing is set to boom.”