The latest data from the Equity Release Council, covering the third quarter of 2024, showed an increasingly positive picture.
It showed clear momentum, with both the number of new plans and the total lending rising for the second straight quarter.
That’s the first time that’s happened since the disastrous mini-Budget, which had such a negative impact on the mortgage market generally, but particularly on the later life sector.
It was also notable that there was a jump of 8% in existing customers opting for further advances to extend their loans, perhaps buoyed by the continued growth in the value of their homes.
While the improvements have been steady, they are nonetheless an excellent indicator of the growth still to come.
What’s driving increased later life activity?
The Equity Release Council report notes advisers are seeing improved confidence from homeowners, and that’s certainly something we are seeing at more2life with our adviser partners.
As homeowners feel more settled, and less at threat from economic headwinds, they start to look to the future and how their property can support their lifestyle in retirement. Alongside that increased confidence, I’d argue the market itself is doing an excellent job boosting interest.
The later life sector has delivered real product innovation in recent times, and those more creative options are acting as a bridge between mainstream mortgages and the traditional lifetime mortgage.
I have been thrilled to see more2life play a leading role in this innovation, particularly when it comes to early repayment charges (ERCs).
ERCs are obviously an important consideration for any potential customer, and it’s important they have a range of different options from which to choose, which is why we have taken steps to offer much greater flexibility.
That is why we launched the Maxi Zero ERC product, the first ever lifetime mortgage to come with no ERCs at all, while the ERCs on our Maxi plan range have been cut from 10 years to seven.
By offering homeowners more flexible options, it boosts the attractiveness of these products, opening up the specialist later lending space to far greater numbers of potential customers.
ERCs are just one example of this innovation, however. We’ve also seen more options around incorporating monthly payments – our Flexi Payment Term lifetime mortgage for example offers enhanced loan-to-values (LTVs) to those with contractual monthly payments, while our Apex Interest Reward allows customers to obtain a pay-rate discount by repaying a portion of their loan interest each month.
While more2life has been at the forefront of this innovation, it’s equally true that other providers are also raising their game and delivering a wider range of creative products which actively meet the needs and wants of older homeowners.
The fact we are seeing activity levels grow steadily shows this innovation has been well thought out and is chiming with advisers and their clients.
Addressing untapped potential
For all of this positivity, however, I’d suggest there remains much more to do. There is huge untapped potential here, with a later life market that could, and frankly should, be much bigger.
Let’s be clear, the older homeowner cohort is only going to grow in size, courtesy of our ageing population. Many are going to want to tap into their housing equity at some point, whether to top up their existing pension income, carry out home improvements to meet their changing needs, or to supply loved ones with an early inheritance.
As a result, the demand for specialist later life lending products will rise.
But in order to meet that higher level of demand, we need a broader adviser base to engage with the market.
Doing your duty
It’s also important to remember the role of the regulator in all of this. Consumer Duty has put an even greater emphasis on the need for advisers to deliver positive outcomes for customers, and to show their working in doing so.
Advisers are going to have to demonstrate all potential options have been properly considered, and this will need to include later life lending products.
The time is now
Including later life products in your advice process is the right thing to do, both in terms of meeting the expectations of the regulator but also delivering the best possible service for your client.
The later life market is on the up, but we are really only scratching the surface of what it can be. Its growth is better for everyone, so now is the time for advisers to think carefully about how they can more substantially incorporate specialist later life products into their advice process.
Ben Waugh is manufacturing director at more2life
