As part of our ‘In Focus’ series on mortgage resilience in a higher-rate environment, Damon O’Connell, Director of Adviser Performance at Key Partnerships, examines why brokers must evolve their approach to later life lending, and how broadening the advice conversation can help support clients navigating rising costs, changing incomes and more complex financial decisions, ultimately strengthening long-term financial resilience.
Brokers will be busy grappling with the rapid changes in the mortgage market as rates change daily and mortgage deals are pulled shortly after they are launched by lenders.
Beneath this short-term volatility is a bigger issue that brokers should be looking at: the worries facing older borrowers in their 50s and 60s who will be concerned about major increases in their borrowing costs at a time when incomes are squeezed.
Those older borrowers may be about to retire or cut back on their hours at work while also juggling saving for retirement with trying to help family financially. Advice for them should now routinely include later life lending options, and busy mortgage brokers will be looking at how they can deliver that holistic support in a way that complements their existing business.
There is a lot to adjust to for both mortgage brokers and older borrowers – data from Moneyfacts shows the average cost of a mortgage taken out now is around £788 a year more than one taken out last year.
Many advisers will be seeing a growing cohort of older borrowers approaching the end of historically cheap deals. Those clients in their 50s or 60s and beyond face the prospect of refinancing onto significantly higher rates at a time when affordability assessments may be getting tighter.
The short-term outlook
Prospects of another Bank of England Monetary Policy Committee rate cut have receded, and the average shelf life of a mortgage deal has dropped to just 14 days, the shortest it has been since August 2023, according to Moneyfacts.
Product availability has also dipped, falling from 7,102 to 6,972 in just a few weeks.
Average rates on two-year fixed rate products have risen to 5.2% while average rates on five-year deals have increased to 5.26%. At the same time, sub-4% deals for higher LTV borrowers have largely disappeared.
The historic picture
Many older borrowers coming off two-year or five-year fixed rates will be looking at major mortgage rate shocks.
Average two-year fixed rates were between 4% and 5.5% throughout 2024, but of course, many older borrowers will have had lower LTVs and potentially could have accessed rates of below 4%. In five years, the picture is particularly bleak as average rates in 2021 were at historic lows of between 2.52% and 2.75%.
Affordability is now a key concern. Borrowers who have retired or reduced working hours may struggle to meet stricter criteria, potentially forcing them onto standard variable rates of 6.5% to 7.5%.
For mainstream mortgage advisers, having a strategy for these conversations is becoming increasingly important, particularly considering the FCA’s focus on providing holistic advice in line with Consumer Duty obligations.
The lifetime mortgage future
Later life lending solutions are now far more flexible than many advisers may realise and should form a core part of these discussions.
Modern lifetime mortgages, especially those allowing voluntary or structured repayments, can offer a practical alternative for borrowers facing steep increases in monthly costs.
By reducing or managing the impact of interest roll-up, lifetime mortgages can offer a middle ground between traditional mortgage refinancing and full equity release, helping borrowers stabilise their finances while remaining in their homes.
However, most mainstream advisers do not specialise in this area, making a strong referral route essential.
For many firms, attempting to build a later life lending proposition from scratch risks stretching resources and diluting focus. At first glance, the proposition to build in-house is compelling: retain full advice fees and commission, build enterprise value, and deepen client relationships. In practice, later life cases are time-intensive, high-touch, and slower to complete, extending the true payback horizon significantly. This is a highly specialist area requiring dedicated expertise, robust compliance frameworks and continual oversight.
Referral provides a smarter, lower-risk solution, giving clients access to expert advice while allowing advisers to concentrate on what they do best.
The later life lending market is nuanced, and advisers need confidence that the referral partner they select can provide genuinely independent, whole-of-market advice and has deep experience in this specialist space.
With new entrants emerging in the later life advising sector, longevity and expertise in your referral partner matter, particularly when the advice will have long-term implications for clients and their families.
Equally, the referral relationship must work for the firm and its client. The referring firm should be able to remain as involved as they wish, with the client relationship fully preserved.
For advisers navigating the changing mortgage landscape, having a trusted later-life lending partner can ensure that older borrowers have a wider range of options when traditional refinancing becomes difficult.
