In response to rising competition from digital banks and the increasingly complex requirements of today’s borrowers, Nationwide are taking steps to innovate later life lending.
Taking advantage of the reintroduction of retirement interest-only (RIO) mortgages by the Financial Conduct Agency earlier this year, Nationwide is testing a retirement interest only mortgage alongside its existing equity release product which launched last year.
The RIO product is available to a small number of existing mortgage members ahead of a full launch later this financial year. To qualify, borrowers must be over the age of 55, receiving retirement income, looking to complete a term extension, change in repayment or a rate switch with a term extension or repayment method change.
According to Henry Jordan, director of mortgages, Nationwide is committed to addressing “the needs of a changing and ageing population in later life and to evolve and initiate products to support people in or approaching retirement.”
Investing in the future
The RIO product trial helping existing mortgage members with their borrowing needs is Nationwide’s first step in innovating later life lending. The Society is also planning to invest £1.3 billion in technology over the next five years, to ensure they are well positioned to make the most of future opportunities.
Joe Garner, chief executive at Nationwide, stated that the plan to transform their technology estate and capabilities will enable them to “develop new propositions, further enhance their service, simplify operations and build new skills for the future”.
Later life mortgage is expected to be the fastest growing segment in the specialist mortgage sector in the next two years. The Marsden Building Society recently extended its Older Borrower Range, the Leeds, Buckinghamshire and Scottish Building Societies have all offered RIO products and with the UK population living longer, more are sure to follow.