David Forsdyke, Head of our Later Life Finance service, shares his thoughts on how today’s base rate decision is likely to effect the trajectory of Later Life Finance products.

If you’re unfamiliar with Later Life Finance, it refers to the increasing range of products only available to homeowners over the age of 55. The pricing of such products, which includes Lifetime Mortgages, tends to move in line with long-term fixed interest markets such as Gilts rather than following the base rate directly. However, the two usually move in tandem.

Following the Bank of England’s decision to hold the base rate at 5.25%, it is likely that yields will be maintained, and Lifetime Mortgage rates are unlikely to change in the short term.

Lifetime Mortgages are currently offered on fixed rates and don’t have an end term. The market leading rate today is around 5.50%, but this will depend on the borrower's age and the property's value.

What is of more interest is the rapid expansion of borrowing options available to older homeowners. An increasing number of lenders are extending their criteria or introducing specific products to cater for the growing number of older borrowers.

We helped a couple in their 70s extend their interest-only borrowing well into their 90s using a new retirement mortgage product. This would simply not have been possible five years ago. The happy couple can stay in their cherished home, continue to make monthly interest payments, and have other options to consider in the future if their circumstances change. For example, the couple could stop making regular payments and opt to compound or roll-up their interest if they wish; something that is feasible using a Lifetime Mortgage.

If you are thinking about your borrowing options in retirement or have a client we can help, get in touch with our Later Life Finance team for a no-obligation consultation about your requirements. Our team are experts in their field and have access to a wealth of lenders.