Later Life

FSE Glasgow: Regulator support and interest-only fuelling later life sector

13th March 2018
"It doesn’t just automatically begin at 55 because that’s when you can access products – we’re finding that this sector was created to support a market which is under-served by High Street lenders."

A panel debate with later life lending experts at today’s FSE Glasgow event revealed a growing interest in the later life lending market, fuelled partly by problems with looming interest-only mortgage deadlines.

The panel, chaired by Steve Cox of Hodge Lifetime, and consisting of Gary Webster (Equity Release Supermarket), Stuart Wilson (more 2 life), Donna Bathgate (Equity Release Council) and Adam Carnall (Age Partnership), first tackled where the later life lending begins – and where brokers should be introducing the concept to their clients.
Donna Bathgate began: “Consumers don’t wake up and suddenly think, I need later life lending. This is a conversation we should be having as early as possible in a client’s journey, and we need to be looking at where housing wealth fits into their overall financial plan.”
Gary Webster agreed, noting that "most consumers end up falling into the later life lending space as a next step when they can’t obtain lending from a High Street lender.”
Adam Carnall went on to point out that, as a market, it has been created specifically to meet needs that aren’t met elsewhere.
He added: “It doesn’t just automatically begin at 55 because that’s when you can access products – we’re finding that this sector was created to support a market which is under-served by High Street lenders.”
Panellists were positive about how the regulator was serving the sector, with Stuart Wilson noting that the market could take ‘encouragement’ from its increasing willingness to look at later life lending.
He continued: “It’s certainly not negative, although there could be more done – we want to see more promotion of the sector as a solution to consumer needs.”
Bathgate praised the continued focus on upskilling advisers and further training in the sector, noting “the regulator’s support, alongside the PRA, is moving us in the right direction and towards a more full recognition of how the equity release market works", adding that "higher risk doesn’t necessarily mean high risk".
When asked what was driving interest and expansion in this market, panellists once again asserted that later life lending and equity release were sectors which met a need in the market where there were gaps – particularly given the wave of interest-only mortgage terms ending.
Adam Carnall was clear that equity release was a viable solution to the interest-only problem, adding that “we’re starting to realise we can’t kick that can down the road,” and that indeed, some High Street lenders were beginning to take the sector seriously as a direct response to the need created by the interest-only issue.
However, other gaps in the market are driving growth in the later life lending market. Gary Webster noted: “There have been structural changes in the lending market as a whole and later life lending has seen greater interest from High Street lenders as a result – for example, the recent changes in buy-to-let and the slowing of that market has meant lenders are looking to other sectors to make up that loss of business.”
There was a positive outlook for the sector as a whole with Stuart Wilson concluding: “We looked into lending to those of retirement age, and we estimate the market to be about £65 billion at the moment, growing to £142 billion in ten years’ time. It’s not just equity release, which makes up about £3bn of that market – it covers a multitude of products and in fact is a more vibrant and progressive market than we previously realised – with plenty of room for growth.”

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