In a report called Retirement Borrowing: Reality, Perceptions, Projections and Potential, the CML also called for Pension Wise to include ‘substantial questioning’ around housing debt, while the trade body added that it would be happy to help with scripts.
The CML said the UK should be mindful of how overseas governments have addressed the housing and borrowing needs of older borrowers and consider whether state-backed guarantees used in the US and South Korea should be considered for example.
Paul Smee, CML director general, said: “There is no silver bullet to address the complex issues involved in the housing and financial needs of older borrowers, but it is hugely significant that so many willing participants from across the mortgage industry and beyond are now collaborating to try to put this jigsaw together.
“We should push forward on the more straightforward issues - such as improving advice hand-offs, using the Pension Wise trigger point to address housing and debt issues, focusing on good product design, and a regulatory focus on avoiding negative unintended consequences on retirement borrowing.”
The CML also created a list of recommendations for the FCA. It told the regulator to think about how to encourage a joined up approach to mortgage, lifetime and investment advice, to provide a standard definition of retirement and to change Mortgage Conduct of Business rules to allow lifetime mortgages to be an acceptable repayment strategy for interest-only.
Mark Harris, chief executive of mortgage broker SPF Private Clients was encouraged by the report. He said: “Something desperately needs to be done to make it easier for older people who want to borrow into retirement to do so.
“This report is the first step; now roundtable talks bringing together all the interested parties, such as regulators, lenders and trade bodies to devise a clear and transparent framework, are essential.
“What’s wrong with an older borrower dying in their home that carries some debt? They can service just the interest while they are alive and the estate can then sell the asset to repay the debt.
“Why are we so afraid of introducing something that is commonplace in other countries? The reason is that there are still some people out there who prey on the vulnerable, getting them to remortgage to invest in timeshares in Cape Verde or Solar energy projects. The way we have historically dealt with this rogue element is to shut down borrowing for all older borrowers.
“More needs to be done to protect the vulnerable and more flexibility needs to be given to those who need it.”
