BLOG: Later Life Lending: Building Market Resilience Through Product Development

You only need to look at the Equity Release Council’s data this year to see that the later life lending sector has faced a challenging 2023 thus far. Understandably so, given wider economic shock waves that are still being felt from last year’s mini-budget that have impacted consumers’ cost of living on a fundamental level and, in turn, their overall confidence levels, especially when making major financial decisions.

However, the Council’s most recent figures showed an uptick in activity towards the end of Q2, and anecdotally many advisers are pointing towards a lot of pent-up appetite as consumers who can wait are choosing to do so in the hope of future rate falls. Another positive has been the ongoing widening of the lifetime mortgage customer profile, as the product’s perception has shifted from one of last resort to something with a wide array of uses that can be an effective tool for a variety of people. For example, over the past five years we’ve seen a fivefold increase in the proportion of people taking out a lifetime mortgage who own a property of £1m and over.

The diverse ways that equity release is being used, even amid the current cost of living crisis, has been highlighted by an analysis of our own H1 data. In the first half of this year, the usual suspects remain in the shape of home improvements and debt/mortgage repayments. Still, despite expectations that those taking out lifetime mortgages would do so on a needs-first basis, holidays have leapt from the fifth most popular reason for new initial advances in 2022 to third this year, with car purchases also remaining among the top five reasons for releasing funds year-on-year.

This only serves to highlight the importance of developing a range of lifetime mortgage products that can cater for a variety of needs and consumer circumstances – whether that’s those looking to take out a lifetime mortgage now (whether out of necessity or for more aspirational reasons), or those who are continuing to assess their options with a view to potentially take out a lifetime mortgage in the future.

We’ve long understood the importance of embracing this methodology – as evidenced by our Classic range, available to all Pure-registered advisers and constantly developed to meet customer needs. This has included a flexible pricing structure, which affords applicants a bespoke interest rate based on their circumstances (as well as offering a 21-day KFI rate guarantee), allowing potential applicants to assess their options with the peace of mind they’re insulated from any future rate increases. Additionally, plan holders can benefit from downsizing protection and Direct Debit facilities for those wanting to make regular, recurring optional partial repayments.

Recent market growth has brought with it an increasingly varied customer profile and opportunities to create more specialised products that cater for specific customer sectors. For instance, our Heritage Special products have been designed to offer high LTVs (of up to 50%) exclusively for applicants aged 80-85, meaning there’s an effective later life lending solution for those of advanced years wanting to release a large proportion of equity in their home.

Similarly, we also appreciate that for many there’s an appeal in making optional repayments – especially if they can repay large proportions annually should they benefit from things like inheritances or maturing investment portfolios. Our newly-reintroduced Heritage Freedom range has been designed specifically with those consumers in mind, allowing them to repay up to 40% of the initial balance annually penalty-free.

Ongoing product development has undoubtedly made for a more resilient later life lending sector in recent years, able to weather political shifts, pandemics and economic instability. However, this must continue if the market is to consistently deliver the best consumer outcomes (in line with the FCA’s Consumer Duty) while also evolving to an ever-changing landscape.

We’re proud to not only be part of an industry that has repeatedly shown its ability to adapt to changing consumer needs but also to be at its forefront. With the appetite for lifetime mortgages remaining strong, we look forward to enhancing our product offering to provide effective solutions for those in later life and, in turn, helping people achieve their financial goals.

    Share Story:

Recent Stories

The later life lending landscape
Michael Griffiths speaks to Darren Deacon and Stuart Heavens from Family Building Society about the current state of play in the later life lending market

Mortgage Insider Podcast


Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.