L&G expects there to be a real interest in exploring a development in hybrid lifetime mortgages to add to the roll-up mortgages there already.
Lifetime hybrid mortgages will be a growth area serving the needs of interest-only borrowers, Legal & General home finance chief executive Bernie Hickman has predicted.
Hickman, who was speaking at the Building Societies Association conference, said: “We do expect there to be a real interest in exploring a development in hybrid lifetime mortgages to add to the roll-up mortgages there already.
“That’s a growth area meeting a real customer need.
“That does bring challenges with it. One of the challenges we wanted to throw out there is depending on which organisation you come to you could get offered different products and go through a different process and that’s one thing we’ve highlighted to the FCA.”
Later in the day a panel chaired by Paul Broadhead, head of mortgage policy at the Building Societies Association, with Hickman and Dudley Building Society chief executive Jeremy Wood discussed finding solutions for interest-only mortgagors.
Broadhead said: “The clarification that the FCA provided recently about affordability on loans where consumers can flick over to an interest-only in future could well encourage some innovation in the market.”
Hickman added: “It is an area we are interested in, particularly when we talk to interest-only customers reaching the end of their term.
“A lot of them haven’t thought it through but just want to continue paying the interest. There is a market there who want to pay the interest and find it strange that they can’t have a lifetime mortgage without paying the interest.
“In broad picture terms there are people who are income rich, asset rich and cash poor and those are the people who could fit into this category.”
Wood said interest-only solutions have unfairly been "vilified".
He added: "It will be appropriate in certain circumstances and as long as lenders don’t treat it as the only way a mortgage can be granted then we ought to be on reasonable ground.
“There is be no reason whatsoever if the safeguards are there this can’t be a perfectly safe part of the market to lend into.”
In April the Financial Conduct Authority announced that later life firms will be able to ‘switch off’ affordability assessments when offering hybrid lifetime mortgages - interest only mortgages that can convert to roll ups.
