U.K. senior citizens aren't putting all of their eggs in the pension's basket. According to Fitch Ratings, demand for reverse-mortgage schemes from the over 65 population - financial products that allow homeowners to make use of any equity they have in their property - is on the rise in the U.K. But financing these mortgage pools can prove tricky. Securitization, analysts say, offers a route to tap funds and structure the various risks off-balance sheet in a form attractive to medium-term investors.
Fitch reports that a strong housing market, coupled with the erosion of state support for retirement and consumers' inertia about saving for retirement makes ideal conditions for the expansion of this market segment. "As the populations of [the U.K.] ages, there is an increasingly broad awareness of the need to develop new ways of releasing personal wealth to the elderly population," said Stuart Jennings, head of Fitch's U.K. RMBS group. "Given the large improvements in life expectancy, the rising cost of healthcare and the potential shortfall in pension provisions, many elderly individuals may have to tap the wealth held in their homes to bolster their income."