Old English lætra "slower," comparative of læt "late" (see late (adj.)). Meaning "belonging to a subsequent period" is from c. 1200. Sense of "that has been mentioned second of two or last" is first recorded 1550s.
In modern use the more common word is later, which is from mid-15c. and is perhaps a new formation or a variant of this word. Latter survives mostly in the phrase the latter, which, with the former is used to avoid repetition (but sometimes incorrectly, when more than two are involved).