"It therefore makes perfect sense to begin getting everything in order to be able to either service this business at the firm or to be able to refer on."
We’re going to hear a lot about ‘opinions’ over the next month or so, certainly in a political sense with much weight given to how the opinion polls are shifting, and what they might tell us about which party is going to form the next Government.
Opinions can be steadfast and hard to shift, but they can also change based on a different understanding being reached, new facts coming to light, events, progress being made and, certainly within the later life lending space, all of the above and then some, with the sector continuing to evolve and develop positively in a new lending environment.
That shift in opinion doesn’t necessarily have to come from those not yet active in our sector – although I assure you it is happening – but it can also come from those who are eyeing up the opportunities now who might have preferred to steer clear before, and it can also come from those who regulate our sector.
To that end I was struck by the words of Emily Sheppard, COO at the FCA in her recent address to the Building Societies Annual Conference, who said “lending into retirement is moving from a niche to a norm”, pointing out that the projected median age of a first-time buyer at mortgage maturity is now 65 years old, an increase from 56 in 2005.
And that of course is without any extension of mortgage term for that first-time buyer, so the chances are that far more borrowers are going to be taking mortgage debt into, and beyond, traditional retirement norms in the future.
The fact the FCA itself is acknowledging this fact and is willing to say this so publicly, should allow all of us active in this space to be even more confident in our future. We certainly feel this at Air as we highlight the merging of mainstream into later life, highlighting the advice and product solution requirements of those borrowers.
Which of course is not to say that we are seeing a wholesale shift in the regulatory approach to later life lending.
Of course, we all have to acknowledge the risks and responsibilities that come with equity release, for example, but as we know, many of the new products coming to market in the later life space are not ‘traditional’ lifetime mortgages. Instead they reflect a change market, a changing demographic, the changing ability to service interest and the like, plus of course a changing want and need to be able to morph the mainstream with a later life lending option later in the term.
All positive aspects of the product offering we are now seeing, and again a sign of the growing confidence in the sector, the demographics that will deliver greater demand, and a greater understanding from advisers and their clients about the options available to them.
Confidence in that aspect is hugely important, and will help drive the market forward. Just recently I read the latest IMLA research into broker confidence which rose in the first quarter of 2024, with 24% saying they were ‘very confident’ and 64% ‘fairly confident’. Combined that was up to 88% from 84% in the previous quarter.
There is also a very strong confidence from advisers in their own businesses, with 42% saying they are ‘very confident’ about their future and 53% saying ‘fairly confident’.
I’m of the opinion that a confident adviser community is much more likely to feel empowered to move into new product and service areas, to add further strings to the proposition bow, and to look for business in parts of the market which they might not have felt confident in exploring.
And, of course, to take on the work that is likely to be increasingly placed in front of them. Later life lending needs are undoubtedly going to be a significant part of this, and it therefore makes perfect sense to begin getting everything in order to be able to either service this business at the firm or to be able to refer on.
Overall, I think it’s fair to say that the later life lending needs of your existing and future client base are only going to grow. Getting the information and support you need – which is readily available I might add – should allow you to forge ahead in this product space and help deliver those positive outcomes for clients. That’s one opinion I’m sticking to and you won’t change my mind on it.
