Mortgages  

The later life lending market is innovating

This article is part of
Guide to later life lending

However, the equity release market saw year-on-year growth of around 10 per cent between the first quarter of 2019 and a year earlier, according to the Best Advice Intelligence Later Life Lending report.

Mat Manser, a former national sales manager turned freelance business development consultant, says the size of the later life lending market has grown fourfold over the past decade.

“That is only going to continue,” he notes. “In the future, I can see the market broadening still further, where clients are able to take several products out during retirement.

“We will go from the current binary, once-only decision, to taking out two or three different styles of product over 20 or 30 years.”

The consensus among the industry experts interviewed for this piece was that the current pandemic is unlikely to dampen product innovation and market growth, even in the medium term.

Last-time buyer market

In anticipation of continued growth in the later life mortgages market, many providers have been holding educational webinars and podcasts.

Among them is Hodge, which has been hosting educational webinars to teach advisers and brokers how the market has broadened in recent years. The most recent series, in April, included a host of product-specific topics looking at the typical characteristics of later life customers and equity release and Rio products.

Emma Graham, director of business development at Hodge, says that she expects later life interest-only products, in particular, to go from strength to strength, noting that “both mainstream brokers and consumers [are] becoming more aware of the greater choice and flexibility these products offer them”.

She adds: “50+ consumers with mainstream interest-only mortgages coming to maturity will most definitely continue to be a target market, with maturities increasing year on year and set to peak in 2032.”

Ms Graham says that Hodge’s internal data suggests that “last-time buyer” purchases are increasing, as they look to use their equity reserves to buy their last home, together with borrowers releasing equity to fund home improvements.

She explains: “With many of us re-evaluating our homes after having spent a considerable amount of time in them during lockdown, we expect to see this continue to grow.

“As the furlough scheme comes to an end and many UK households find themselves in financial difficulties, we also expect to see family gifting increase.”

Richard Merrett, head of strategic development at SimplyBiz Mortgages, agrees that the months ahead are likely to see financial advisers dealing with growing demand once more.

“I believe that post-Covid, just as in the mainstream mortgage market, we will see an increase in the need for flexibility,” he predicts.

“It is highly likely that older borrowers will unfortunately need to help their children and grandchildren who have been adversely affected by the pandemic. In some instances, these may be short-term requirements, so flexibility will become increasingly important.”