Number of retirement interest-only products doubles in 12 months

Initially, providers seemed slow to offer RIO products, with only two providers launching a choice of five products by July 2018.

However, the number of available products has almost doubled over the past 12 months, with a further six providers also entering the sector.

Additionally, the average rate has fallen from 3.50% to 3.47%.

Eleanor Williams, finance expert at Moneyfacts, said: “Historically, many older borrowers who had retired or were shortly due to do so, found it difficult to find a new mortgage deal. When the FCA reclassified RIOs as mainstream mortgages rather than equity release products in early 2018, a lifeline was thrown to many who may have previously felt trapped or not catered for.

“According to recent research from Ipswich Building Society, 60% of borrowers over the age of 50 felt that there were fewer mortgage products available to them compared to younger mortgage applicants, and more than half believed that they had fewer mortgage providers to choose from.

“It should therefore be welcome news that, as Moneyfacts data shows, the RIO mortgage market is continuing to grow. Over the past 12 months alone, not only has the number of providers active in this sector increased (standing at 18 today), but the number of products available has almost doubled to 74 – compared to 38 deals that were on offer in February last year. In addition, the average interest rate charged has also fallen to 3.47%, which is a positive step."