Leeds Building Society launches Retirement Interest Only lending
Leeds Building Society is launching new Retirement Interest Only mortgages to offer older borrowers more choice.
The Society is the first national high street lender to enter this new market, following extensive research into borrowers’ needs as they age and how best they can be supported in later life.
The Financial Conduct Authority (FCA) introduced the first definition of what constitutes a Retirement Interest Only mortgage earlier this year and introduced specific regulations for this market.
Richard Fearon, Leeds Building Society’s Chief Commercial Officer, welcomed the FCA guidance.
He said: “As the UK’s population ages and lifestyles and expectations change, we welcome the regulator’s acknowledgement that the needs of borrowers and homeowners will continue to evolve.
“Similarly, lenders must remain responsive to these changes and in how they can support consumers.
“We’re the first national high street lender to enter this market and are drawing on our experience and expertise in the interest only sector, together with our understanding of customer needs and the wider market.
“Choosing a mortgage is always a highly personal decision and everyone’s individual circumstances and priorities are different, so it’s important consumers take the appropriate advice.
“For that reason these new mortgages are available only through brokers initially.
“We plan to launch Retirement Interest Only products through our direct mortgage team later this year.”
The regulations clarify the difference between Retirement Interest Only and lifetime mortgages – unlike a lifetime mortgage, the interest on a Retirement Interest Only mortgage cannot be rolled up so the borrower will have to demonstrate interest only repayments are affordable throughout the length of the loan.
A Retirement Interest Only mortgage will be repaid on a specified life event, which can include the sale of the property, moving into residential care, or the death of the borrower.
David Hollingworth, Associate Director at L&C Mortgages, said: “Retirement Interest Only has the potential to offer older borrowers an alternative option to a traditional mortgage over a specified term or to lifetime mortgages. The regulator’s move to increase access to Retirement Interest Only recognises that older borrowers will have different requirements that could be better served from a wider range of options.
“The market needs a broader choice available to these borrowers and the launch of Leeds BS into this sector is an important step forwards.”
At launch on 30 July, the Society will offer three Retirement Interest Only mortgages – fixed rate deals for either two, three or five years – for borrowers aged between 55 and 80.
Notes to Editors
To discuss a new case with one of our mortgage development team, mortgage introducers should go to www.leedsintroducer.co.uk to find details of their nearest Business Developer contact.
Leeds Building Society was named Best Building Society Savings Provider in the Moneyfacts Awards for 2018, having also won this title in 2017 and 2016.
Leeds Building Society won the title of Best Shared Ownership Mortgage Lender in the 2018 What Mortgage Awards, its third consecutive year of success in this category.
Leeds Building Society operates throughout the UK, Gibraltar and Ireland and has assets of £18.5bn at 31 December 2017 (£15.9bn at 31 December 2016). The Society’s head office has been based in the centre of Leeds since 1886.