Legal and General  

L&G equity release advances fall 18% as it refuses to lower price

L&G equity release advances fall 18% as it refuses to lower price

Legal & General has said it will maintain the “pricing discipline” of its lifetime mortgages, a type of equity release, even if it means taking on less customers.

In half-year results published today (August 9), L&G said the lifetime mortgage market was becoming more competitive, and that it has decided to focus more on the "wealth sector”, referring to those with higher value properties.

“We will maintain pricing discipline at the expense of volumes if required,” the company said, adding that it needs good margin assets to back its long-term annuity liabilities. 

Lifetime mortgages make up around 7 per cent of L&G’s total annuity assets, and £5.8bn of its £26.3bn direct investment portfolio.

In the first half of 2022, L&G’s advances for lifetime mortgages, including retirement interest-only mortgages, were £338mn, down £76mn on the same period last year.

Advances are the initial money L&G lends as well as the top-ups clients drawdown over time. 

“While we maintain a strong focus on the traditional lifetime mortgage market, where we are focused on offering high levels of flexibility and choice, we are increasingly also focused on the ‘wealth’ sector: those with higher value properties increasingly see the benefit in lifetime mortgages when planning the distribution of their estate to future generations,” the company said.

More broadly, Legal & General Mortgage Club facilitated £50bn of mortgages, up 6 per cent on the last half-year.

The company is focused on growing its fintech services. L&G’s mortgage research tools for affordability, criteria and product have now reached some 19,000 advisers which it put down to a focus on user growth through active promotion over the last six months.

Meanwhile, its 49 per cent investment in Smartr365 - a fintech company trying to simplify the mortgage process for brokers - has, it said, “moved from start-up to scale-up” having banked more funding earlier this year. Smartr365 now has around 3,400 licenses signed up.

With buying a new house often acting as a catalyst for purchasing life insurance, L&G’s protection arm has grown over the last half year.

Protection premiums were up 7 per cent to £1.6bn compared to £1.5bn last year.

L&G put its retail operating profit, which increased 14 per cent to £332mn from £292mn this time last year, down to its growing UK protection business and to valuation uplifts in two of its retail fintech businesses over the past half year.

The company's £78.8bn annuity portfolio has lost more than £10bn since June 2021, when it sat at £89.9bn. Individual annuity sales were also down 6 per cent, to £453mn from £483mn last year.