The Financial Conduct Authority has launched a formal market study into lifetime mortgages and retirement interest-only mortgages. Here is what the review covers, why it matters, and what borrowers should know now.
On 20 March 2026, the Financial Conduct Authority published its Terms of Reference for market study MS26/1 — a wide-ranging investigation into the later life lending sector. The study specifically covers lifetime mortgages and retirement interest-only (RIO) mortgages, the two main regulated products that allow older homeowners to access their property wealth.
This is a significant regulatory event. A formal FCA market study carries statutory powers to compel information from firms, and its conclusions can lead to binding rule changes or market-wide remedies. The last comparable review of this sector was conducted over a decade ago, since when the market has changed substantially.
Key date: Terms of Reference published 20 March 2026. The study is expected to run throughout 2026, with any resulting rule changes most likely taking effect from 2027 onwards.
The Terms of Reference set out four broad areas of scrutiny:
The FCA has been explicit that it wants to understand why take-up of later life lending products remains low relative to the scale of housing wealth held by older homeowners. The regulator has also signalled openness to recommending new product categories if it concludes that current options leave unmet needs.
The backdrop to this review is a striking gap between available wealth and actual lending. UK homeowners aged 60 and over collectively hold an estimated £3.84 trillion in property equity. Against that, actual equity release lending runs at roughly £2.44 billion per year — a small fraction of the total.
| Metric | Figure |
|---|---|
| Property equity held by over-60s (UK) | ~£3.84 trillion |
| Annual lifetime mortgage lending | ~£2.44 billion |
| Lifetime mortgages advanced (most recent year) | ~27,000 new plans |
| RIO mortgages advanced (most recent year) | ~3,000 new plans |
| Proportion of working-age adults undersaving for retirement | 43% |
With 43% of people estimated to be undersaving for retirement, housing wealth is increasingly being seen not as a separate asset but as a core component of retirement income planning. The FCA's market study reflects a broader policy recognition that access to housing equity needs to work well for consumers.
Lifetime mortgage products approved by the Equity Release Council (ERC) — which covers the vast majority of new plans — must adhere to five core safeguards. These exist independently of the FCA review and remain in force today:
These protections are a meaningful baseline. However, the FCA review may explore whether they are consistently delivered in practice, and whether additional protections are warranted for specific consumer groups.
It is important to be clear about timing. The FCA study is expected to run throughout 2026, and a final report with any recommended remedies is unlikely before late 2026 at the earliest. Any resulting changes to FCA rules would then go through a consultation process, meaning binding changes are most likely to arrive in 2027 or later.
Possible outcomes flagged in industry commentary include:
What this means now: Existing plans taken out today will be subject to current rules. If you are considering equity release, the safeguards in place now are robust. It is worth ensuring that any adviser you use is FCA-regulated and that you understand the long-term implications of compounding interest.
The study covers both main products in the later life lending market, and it is worth understanding the distinction:
A lifetime mortgage allows you to borrow against your home with no mandatory monthly repayments. Interest either rolls up (compounding over time) or, in many modern plans, can be paid voluntarily or in part. The loan is repaid when you die or move into long-term care.
A retirement interest-only mortgage works similarly to a standard interest-only mortgage — you pay the interest each month, so the loan balance does not grow. The capital is repaid on death or entry into long-term care. RIO mortgages suit those with sufficient regular income to service interest payments.
Both products are regulated by the FCA and require FCA-regulated advice before completion. The market study will look at whether the relative take-up of each product (lifetime mortgages account for over 90% of the market) reflects genuine consumer preference or whether RIO mortgages are being systematically underutilised.
Want to understand your options before the market changes? Verity Home offers free, no-obligation equity release and later life lending advice. Book a consultation today.
Book a Free ConsultationIf you are considering equity release or a RIO mortgage, the FCA market study does not change the fundamentals of whether releasing equity could be right for you. The protections currently in place are substantial, and FCA-regulated advice is a legal requirement.
There is no evidence that the study will result in product withdrawals or make equity release harder to access in the short term. Indeed, the FCA's stated aim includes expanding access for consumers who could benefit.
What the study does underscore is the importance of taking proper advice. The FCA is paying close attention to advice quality across the sector. Ensuring you work with a properly regulated adviser who takes time to understand your full financial picture is the most important step you can take.
For a plain-English overview of how equity release works, see our equity release explained guide.