What does 2022 hold for the later life lending market?

"Our push towards a £6/8/10 bn lending market is already making great headway and I have no doubts that 2022 will be a formidable stepping stone towards a fantastic future for this lending space"

When you’re as active in a sector like later life lending as we are, then I think there is a certain expectation that you’ll be willing to stick you head above the parapet and give a view on what the future might bring. After all, we clearly believe in this sector and why shouldn’t we have a confidence in what is likely to happen?

So, below I’ll take on that ‘challenge’ and give a view on what I anticipate we’ll get throughout the rest of the year and beyond in some key areas.

Demand

The first big question is, do we actually have ‘demand’ for late life lending products? I’ve said it many times but no-one wakes up in the morning and thinks, “I’ll get myself an equity release product today or a RIO...”

What they do wake up with is a need, a problem to be solved, an ambition, a requirement, and it might just be that the best way for them to fulfil all of the above is via later life lending and accessing the equity in their homes.

In that regard, ‘demand’ is only going in one direction, fuelled by the demographics of this country, an ageing population with more responsibilities, who have access to an asset which is likely to have grown in value since they last bought it, and which they can tap into for all manner of reasons.

In a very real sense, the pandemic might have merely added to that ‘demand’. I suspect it has focused minds on mortality, about what we might want to do particularly later in life, who we might want to help now rather than through an inheritance, and what could be achieved if we can release the cash in our homes.

We know the product is loved by the customers who take it out, and the apprehension around accessing equity via equity release or RIOs or mainstream products is fading with each and every month, and certainly with each and every client who receives the right advice. Later life lending products change people’s lives and, because of that, they are going to continue to change many more people’s lives in the future.

Products

Advisers have a growing number of products to choose from, with established providers/lenders pushing the envelope in terms of innovation and accessibility. As I write I believe there are over 700 products available in this space, and I’m confident there will be more.

There is a magnetic effect with this sector at the moment and new lenders will make their presence known. Plus, we have a much bigger rebroking market than we have ever had, and this will have a major influence on product choice and new entrants.

Pricing

Product choice and pricing are intertwined, and while the sector is clearly benefiting from highly-competitive rates at present, my view is that the overall trend for 2022 is likely to be a very slight increase. Of course, amongst this, advisers will be able to find individual products/rates which are as competitive as anything available over the last 12 months. But overall, I sense a slight increase.

That said, while some of the major providers might be able to price more competitively than others, what it will mean is that those who can’t take the very slimmest of margins from a product offering, are going to have to think about competing in a different way. Thus, we’re likely to see greater innovation to secure the business and indeed greater focus on service delivery, speed, criteria, and the use of technology to deliver that.

Technology

Here again we are likely to see some considerable steps forward. In 2022 we will get the first full online application process from start to finish from one provider, and that will act as a catalyst to others to up their game and meet the same level.

Everything will be seamless from the factfind, through the sourcing, to the KFI, the application, the valuation/solicitor, you know the score, and it will be at the adviser’s fingertips bringing a huge amount of efficiency to your interaction with the client and all the other stakeholders. Greater technological efficiencies means more business can be written in a shorter space of time, and the value and benefits of this will be obvious to all.

Overall, therefore, I look forward to the rest of the year – and what it can offer our sector – with huge anticipation and confidence. Our push towards a £6/8/10 bn lending market is already making great headway and I have no doubts that 2022 will be a formidable stepping stone towards a fantastic future for this lending space and the clients who rely on advisers to deliver what they need.