Industry must do more to support older borrowers
Moray McDonald, chair of the Council of Mortgage Lenders, said that government often concentrated on younger borrowers and first-time buyers, leaving older borrowers without sufficient support.
“We hear a lot today about the bank of mum and dad. But, bearing in mind the staggering growth of housing wealth held by older people, this bank is barely open for business,” he said.
“It has assets on the balance sheet, but they are illiquid. It is not a cash pile, but an accumulation of spare rooms. The number of over-65s is growing, but hardly any of them move, and this tends to ‘lock in’ their assets.”
These larger homes could instead be used by younger borrowers, he said.
“The small number of transactions involving older people means that their homes are not released for larger families to occupy or for re-development to provide housing that might be more attractive and suitable for an ageing population. That doesn’t look healthy.”
The trade body suggested that while equity release was appropriate for some, wider solutions were needed to solve the UK’s housing crisis.
“The government clearly wants a housing market that works better, but its emphasis is on helping younger buyers. There appears to be comparatively less attention on encouraging older people to move into homes that might better meet their needs, despite the enormous potential in freeing up under-used housing resources or equity that could help younger buyers.
McDonald added: “Equity release is the answer for some, but the market remains small. Mainstream lenders will therefore need to play a much bigger role if we are to make serious inroads in addressing the challenges of retirement borrowing.”