The City regulator has launched a review into later life mortgages, anticipating a future where older homeowners increasingly rely on their property wealth for financial stability.
The Financial Conduct Authority (FCA) said that 43 per cent of people are currently undersaving for retirement, according to recent government analysis.
This shortfall suggests products like lifetime and retirement interest-only (RIO) mortgages could become crucial.
These financial tools enable consumers to unlock equity from their homes, either as a lump sum or through a drawdown facility, without needing to repay the capital until a specified life event, such as their death.
The regulator also suggested that new, innovative products, similar to these existing mortgage types, are likely to emerge as the market evolves to meet evolving needs.
The FCA said that it wants to understand if the market will develop to meet the increased and differing needs of people in the future.
In a speech on Friday to the JP Morgan pensions and savings symposium 2026, FCA chief executive Nikhil Rathi said: “For homeowners, choices around downsizing, equity release or later life borrowing can interact directly with how their pension savings are used.
“And as mortgage terms extend further into later life, and pensions savings gaps persist for some groups, housing wealth will play a larger role in supporting retirement living standards.
“Products like lifetime mortgages and retirement interest-only mortgages – currently more niche – may become more prominent parts of the retirement landscape.
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“This raises important questions.
“How straightforward is it to understand the trade-offs between pension drawdown and borrowing to utilise housing wealth?
“And does the market currently provide the advice and support people need to navigate those choices with confidence?
“These are just a couple of the questions behind the market study we are running this year.”
He said that the regulator will be looking at whether the later life mortgage market “can and will develop in a way that meets consumers’ evolving needs, and what changes might be required”.
The regulator will explore how people might be better supported to access more holistic advice and guidance on later life lending.
Mr Rathi said decisions “are rarely straightforward – often spanning housing, inheritance and long-term care planning considerations all at the same time.
“And we can never lose sight of ensuring vulnerable consumers get the support they need and are not exploited.”
Mr Rathi said that for renters, “the absence of housing assets materially changes the retirement equation”.
He said: “Analysis from Standard Life suggests people who expect to rent during retirement could need an additional £398,000 in savings.
“With home ownership falling, this will only become a more pressing issue.
“Our interim pure protection study is looking at the structure of markets for products like life insurance and income protection, where take-up remains low despite the crucial role these can play in managing risk over the longer term.
“These different elements must work much better together to support consumers in making decisions about their financial futures.
“So that retirement is a glide path, not a cliff edge.”
The FCA said it would welcome views on the scope of the market study and the issues it will explore by 17 April.
