The Financial Services Expo (FSE) London exhibition yesterday saw later life lending experts welcome FCA proposals to change the rules around interest-only lending to allow repayment to come from the sale of property as an exit route.
When asked by Robert Sinclair, chief executive for the Association of Mortgage Intermediaries (AMI), who was chairing the session, panel members were united in their positivity towards these proposals.
Marie Catch, development manager at Legal & General, said: “We think this is really good news and we hope that lenders will adopt this strategy as it would give customers additional flexibility and choice. It also offers a strong opportunity to help accelerate product innovation.”
Claire Rankin from Shawbrook Bank, added: “There are plenty of people who are underserved because of minimum equity positions but in some areas of the country prices will greatly differ, so if it’s just sale of property then that’s a great thing. If there’s a minimum equity position then there are still some people who are going to be excluded from that market and therefore underserved. So it will be interesting to see how this progresses, but any evolution in that sense is welcome.”
The re-classifying of retirement mortgages was highlighted by the panel as an important step.
Dean Mirfin, technical director at Key Retirement, suggested that the proposals will be widely accepted if they offer more scope and additional options for consumers. He said: “We genuinely don’t see these proposals as a threat or an issue for us. It’s a good move to let lenders feel a lot more comfortable.”
However, there was a word of warning from Adam Carnell, head of partnerships at Age Partnership. Despite suggesting that the outcomes would be positive he also warned: “I think this could have an impact on demand for equity release if it does proceed. And it could allow some lenders and building societies to potentially move clients in volume without advice onto an alternative product which may be a danger. This heightens the need for holistic advice so that clients are fully aware of all the options before they proceed.”