"It's similarly crucial that we don’t lose sight of the need to ensure they’re properly looked after post-completion, and their needs are met over the full duration of their lifetime mortgage term."
For many, this month marks a year since large-scale changes in life as the effects of the pandemic really started to take effect and manifested large-scale changes in our professional behaviours.
For those in the lifetime mortgage sector, it’s arguably been twelve months which have only served to highlight the need for effective and consistent levels of customer service throughout the mortgage term, as people in later life seek to structure their finances in a way that helps them to navigate an especially changeable world with relative security. Additionally, factors such as illness, bereavement and financial insecurity can all potentially lead to vulnerability, which makes providing gold-standard service standards throughout the loan paramount.
Looking back over the past year, it has to be said that the market has showed an encouraging level of resilience in the face of challenging trading conditions, with the latest Equity Release Council figures showing a gradual regression to 2017 levels of activity rather than a complete freefall. A lot of this has been attributed to ongoing product innovation that has ensured that lifetime mortgages have remained an attractive proposition to those looking to fund their retirement, and indeed it’s what many are pinning a market resurgence on when the world begins to open up and customer confidence in making major financial decisions returns.
But while continuing to offer effective retirement solutions to potential new customers is undoubtedly important, it’s similarly crucial that we don’t lose sight of the need to ensure they’re properly looked after post-completion, and their needs are met over the full duration of their lifetime mortgage term. To underline my earlier point about how recent events have placed a greater onus on customer service, several demographic trends have surfaced in recent months, which have highlighted how the pandemic has affected the retirement plans of later life.
For one, data from LV has shown that 3% of those aged 55-64 have taken early retirement, with 4% in the same age group claiming to have accessed their pension savings to supplement their income because they’ve been made redundant or their earnings are reduced. People taking early retirement and accessing their pensions may lead to them exploring later life lending earlier in their lives, and as a consequence seeking further advances during the mortgage term. Similarly, existing customers who’ve been made redundant may seek to use any redundancy payout to make a partial repayment and manage their account.
Similarly, the rise in gifting – accounting for over £750m of 2020’s released property wealth - may see those who’ve initially taken out a lifetime mortgage for themselves looking to release further funds in the future to assist a family member (or vice versa), and should those gifted funds be repaid by the recipient the plan holder may again seek to take the opportunity to make repayments and manage their accounts.
As part of our holistic approach to providing market-leading service standards, we’ve sought to ensure that our customers enjoy first class follow-on care. This has manifested itself not only in a comprehensive expansion of our Customer Account Servicing team, but also in the creation of both customer-facing and adviser-facing resources detailing the levels of service we’ll provide (including customer-facing literature explaining all the processes involved in their plan features). Furthermore, we’re committed to continually enhancing our offering to provide the best possible customer experience, as evidenced by the recent launch of a direct debits facility.
The market has shown itself to be an admirably resilient beast of the last year or so, and with the market likely to rebound as customer confidence gradually returns its future prospects look bright. However, while ongoing product development is important, so is recognising that many who take out a lifetime mortgage in the current climate will likely have changing circumstances in the coming years and putting the resources and measures in place to ensure they’re met throughout the full term duration.