"In the past few months I have felt something stirring that could take equity release into the next level."
However, in the past few months I have felt something stirring that could take equity release into the next level. First, we saw OneFamily join the market with a product delivering the variable interest rates many advisers have been calling for for some time. This innovative new product has only just arrived, but it signalled to me that new lenders are looking to join the market with a big splash.
Second, Nationwide recently increased their age limits to 85 for the mainstream mortgage market, further increasing the spotlight on retirement lending. With the country ageing as it is, retirement lending will have to become more of a focus for the future and this will help equity release continue to climb into the focus of the wider population.
Third, Nationwide have also announced that they too are considering entering the equity release market with a brand new product. More big name heavy-hitting lenders joining the market will help more people trust the effectiveness of the lifetime mortgage and will hopefully tempt other high street lenders into the industry.
Finally, Retirement Advantage have now announced that they will be launching a new line of lifetime mortgages that will do away with the need to provide proof of income or expenditure as part of the application process. This change, which will apply to Retirement Advantage’s interest select equity release products and will still retain the same safeguards as other products, signals the first lender to react to the FCA’s April announcement that lenders will be able to ‘switch off’ affordability assessment for borrowers offering interest-charging lifetime mortgages that can convert to roll-up mortgages.
So why is this significant? Simplicity is one of the main reasons. For too long, the efficacy of equity release has been blurred by confusing checks and double checks with jargon that doesn’t help the adviser, and certainly doesn’t help the customer. To be able to ‘switch off’ affordability assessments allows for one irrelevant stumbling block to be bypassed and more streamlined products enter the market. I would think it unlikely that Retirement Advantage are the last provider to offer this new streamlined product without affordability assessment.
However, beyond simplicity, this change also represents a grander point of understanding and recognition from the FCA of the equity release industry as a whole. The Equity Release Council has been lobbying the FCA on this point for a considerable amount of time, so this change is a real victory for the entire market. The regulator has woken up to the fact that there is a clear difference between the way lifetime mortgage customers are charged optional interest and the way interest is accrued in the standard residential mortgage market.
Collaboration with the FCA will continue to be essential to the growth of equity release, and successes like these should motivate us all to continue to look to the future with confidence and passion. I truly believe that the lifetime mortgage will be an integral part of the future of retirement lending, and it feels to me that there is a sense spreading throughout the industry that an equity release charge could soon be afoot. As long as we retain our commitment to protecting the safeguards we have worked so hard to secure and that may mean an increase in a variety of safeguards over a range of products as opposed to one size fits all, and we continue to provide the very best products for our customers, I can see no reason why more lenders won’t follow OneFamily, Legal & General, and Nationwide’s lead in entering this growing market and driving equity release toward more mainstream success.
