Special Features

Year in Review: later life lending in 2020

Amy Loddington
23rd December 2020
later life year in review
"Introducing desktop and semi-automated valuations alongside remote-based financial and legal advice has enabled the lifetime mortgage market to continue serving older borrowers throughout the crisis"

2020 has been a very unusual year. A global pandemic has drastically changed our day-to-day lives and - in many ways - our industry. To look back at how the past twelve months has affected how we do business, Financial Reporter will be sharing a series of Year in Review pieces covering different sectors of financial services. Experts from across the industry will share their thoughts on 2020 and how we can look forward to 2021 - here, we look at the later life lending market.

Here's what some of the biggest names in protection had to say about this year and how the market will continue to change in 2021:

Lisa Martin, development director at TMA Club:

“The later life lending market has also adjusted admirably to a rapidly changing landscape. Introducing desktop and semi-automated valuations alongside remote-based financial and legal advice has enabled the lifetime mortgage market to continue serving older borrowers throughout the crisis. These measures have helped the industry’s recovery enormously over recent months. Indeed, the Equity Release Council’s latest figures show that the number of new lifetime mortgages agreed between July and September rose by 41% compared to the previous quarter, which is testament to the hard work of trade bodies, lenders, advisers and service providers in helping to stimulate market activity.”

Nick Sanderson, CEO of Audley Group, said:

“The UK residential property market, understandably, buffeted at the start of the first lockdown. But during this second lockdown early indicators are looking good with the stamp duty holiday undoubtedly helping. Knight Frank found that the number of valuations of homes being put up for sale was up 38 per cent last week, and exchanges were 11% higher. A stark difference to the experience of the whole market in March.

“However, a different story is emerging within the retirement living sector. This year, we have continued to see a surge in demand as the retirement village model has, to date, proven hugely effective in keeping older people safe and supported in their own homes. And, above all, having easy access to health, wellbeing and care services. Offering a strong sense of community across the villages, owners have felt more connected to others. Recent research we did found that half (47%) of people who haven’t yet retired, and experienced lockdown loneliness are now reconsidering their later life plans and two fifths (43%) say they will do anything they can to avoid loneliness in the future.

“The attractiveness of the model has never been clearer to our owners and prospects, and indeed investors. The key to minimising feelings of isolation is creating a strong support network and providing families with the reassurance that their loved ones are being well looked after. We continue to invite prospects virtually through our doors so they can experience this themselves by video tours, external fly throughs, and CGI visuals, all from their own home.”

Louise Bunce, head of proposition and marketing at Ipswich Building Society:

“With lockdown leading to many intergenerational living arrangements, the industry has seen growing numbers of later life borrowers seek to remortgage and unlock a chunk of capital from their homes, to gift to adult children looking to get a foot on the property ladder. With the disappearance of 95% LTV deals throughout most of 2020, many younger would-be first time borrowers were simply unable to get a mortgage and so parents and grandparents helped to boost the size of their deposit, unlocking their offspring’s ability to buy their own home.”

Dave Harris, CEO at more2life, commented:

“2020 has been a transformative year for the later life lending market, particularly when it comes to the use of technology. Historically, the later life lending industry has been hesitant to break away from paper-based methods, but the pandemic has proven to be a catalyst for rapid development in this area.

Since the onset of the Covid-19 crisis, equity release lenders have adopted digital-first processes like remote valuations to ensure they can continue to support older borrowers amid the ongoing uncertainty. Intermediaries have followed a similar approach by introducing innovative services like video calls or more phone-based advice.

“While no-one can predict the short-term outlook for the market with certainty, we are seeing encouraging signs of recovery as we approach the end of 2020, with consumer confidence and lending volumes slowly returning to pre-Covid levels.  I hope to see key industry players using the rest of 2020 to gear up for next year by implementing or improving the digital systems that will better serve their business, their teams and their customers in the long-run.”

Mark Dickinson, CEO at Lifestory, added:

"The housing industry has collectively had its fair share of challenges and disruption in this unusual year, but it has also been heartwarming to see the positive benefits of being a part of our later living communities. This coupled with progressive operational responses to the pandemic will change the future of Lifestory and the industry for years to come.

"During the first lockdown, the later-living industry was particularly hard hit by the pandemic with heightened concerns around the safety and well-being of our existing owners some of whom fall under the vulnerable category. In dealing with these issues, it did at least raise the importance of the sector and how later-living communities provide a sense of community, support and safety. As a result, we have experienced an increase of interest from those looking to become part of our new build communities, both as purchasers and now increasingly by making the most of our rental product. We have also seen a great deal of interest from those looking to move away from larger cities and those seeking easy access to outdoor spaces which our communal gardens and country locations offer in abundance.

“We’ve also had to deal with inhibited access, particularly during the first lock down, and in response we quickly adapted and embraced the digital world to help us engage with our customers by implementing virtual viewings into our sales processes. Through our ‘Stay Connected’ programme, technology support was also provided to those existing owners that required assistance to help them keep in touch digitally with friends, families and each other.

‘’With the later- living sector in the UK expected to grow exponentially in 2020, with a record £1.5 billion investment predicted despite the challenges, at Lifestory we can only reflect on what has been a hard yet meaningful year and look to the future ahead. With confidence.

“As we approach 2021, we don’t see our customers changing where and how they want to live. We will continue with our aim to create independent later-living communities in well situated, brownfield sites ensuring homes are close to key amenities, such as supermarkets and doctors’ surgeries, open spaces and transport links with additional support and safety. Our community offer has proven to be a winning formula and we will continue to deliver homes tailored to encourage wellbeing and support that our owners look for to maintain their active social lives.’’

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