Equity release is not the only fish in the later life lending lake

The latest equity release lending figures show the sector has been breaking £1bn per quarter over the last year and it, therefore, looks highly likely that it will end 2021 in the region of £4.5bn lent to (predominantly) lifetime mortgage customers.

Related topics:  Later Life,  Equity release
Stuart Wilson | Air Group
9th December 2021
stuart wilson lla

Given where the sector has been at certain points in recent history, that figure will be a strong return and I have no doubts the corresponding figure for 2022 will be north of £5bn, and perhaps with a prevailing wind, could even touch the £6bn mark.

However, as has been our tendency, there is a danger that we put all our eggs in the equity release basket, and we effectively miss out on a larger opportunity. Especially when you consider that the wider later life lending market – equity release, RIO, retirement mortgages, and the like – is likely to be in the region of a £20bn market.

My view is that, if you’re going to go fishing in a lake, why not make it a large one, and that it, therefore, makes perfect sense to - extending the metaphor - cast your net as wide as possible.

By this, I mean that equity release is not the only fish in the later life lending lake and that it’s imperative for advisers to be looking at the provision of advice on all those options available, not simply the one they might have specialised in until recently.

At our recent Annual Conference, I was asked if I saw the sector becoming ever more specialist, and I had to answer that I saw the future as being quite the opposite. Our recent Census showed the underlying agreement that we have to move away from a focus purely on equity release to one on later life lending, and it would probably be worthwhile to rebrand as such.

Because the simple fact is if you’re only fishing in those equity release waters, then you’re going to be missing out on a lot of consumer demand from those who are not suitable for a lifetime mortgage product.

Don’t get me wrong, there are also customers who will begin engagement with you talking about a mortgage option, but who ultimately end up at equity release, however, if you’re not in the market for those older mortgage customers, then you’re not going to be having the conversation in the first place, let alone providing them with a product you actually know incredibly well.

A broader range of product options has to be the way forward for those wanting to service the growing demand coming in from consumers for later life lending.

Again, at our Conference, I was asked to explain what I meant by advisers working in silos? After I’d answered the question about equity release being a silo within the wider later life lending space, it occurred to me that this was actually a positive question to ask.

Perhaps the adviser that asked it wasn’t aware of the siloed nature of equity release, compared to later life lending, and therefore wasn’t constricting their own offering to just lifetime mortgages. I was hopeful that they would be offering the full range of later life lending options to clients because that was better for their business, and it would be certainly better for the consumer in terms of the outcome they received.

I hear a lot from advisers who recognise that demand is growing for later life lending products – perhaps they see it themselves amongst their own client base? They will certainly see it in terms of the reliance more people now have on their housing wealth when they are confronting issues such as their retirement cost of living, increased food/utility bills, meeting a pension gap, and all the other issues that require people to look for options in later life.

What they tend to lack is support and guidance – which of course we at Air Group can provide in abundance – but we also have to set new advisers on a later life lending path, not just an equity release one, for all the reasons listed above.

Options in both the equity release and later life lending sectors will grow; innovation is happening all the time and product solutions will change as the customer’s needs change. However, if you’re unable to access all those options then you and they will suffer.

Equity release is vital, and it will remain a fundamental part of older homeowners’ product solutions, but it should be seen as part of a package of later life lending options. The future is in holistic later life lending, and we can help you grasp it.

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