"I think it’s worth viewing service (and especially technology-led service) less as a differentiator, and more as another way to help deliver great outcomes."
FR: How would you describe the challenges facing the later life lending sector at the moment?
I don’t think it’s any great secret that the wider economic landscape has presented a challenging backdrop in which to operate, the results of which have been heightened interest rates and eroded consumer confidence.
However, I think it’s important to note the increased industry resilience relative to comparable rates and market conditions. We were seeing similar rates back in 2018 and considered it a landmark achievement to hit £1bn of lending for the year, while last year we saw £2.6bn. While it may not be up there with the market’s peak, it underlines the market’s growth over the years.
This is partly due to consistent product development from lenders (and product standards from the Equity Release Council), which have helped to capture a more diverse audience base and continues to provide a solid bedrock for market growth.
FR: How important is product development when it comes to industry growth?
I think it’s vitally important, as it gives customers more options when it comes to achieving their financial goals. When we look at how the market has evolved, over the years we’ve seen more and more products offering things like downsizing and inheritance protection, more flexible lending criteria, and optional repayment options (which the Equity Release Council has since mandated for all new lifetime mortgages), and all of this contributes to a market landscape that appeals to a broad variety of demographics.
We’ve understood this and have taken an approach of constant improvement to our products. Over the past month or so alone we’ve increased LTVs on our Classic and Emerald ranges, while the latter has also benefitted from the addition of drawdown options, in line with all of our other products and meaning all of our ranges now offer this type of plan. We’ve also increased maximum age on Emerald (initial and further borrowing) and Classic (further borrowing) to 90, providing those in higher age brackets more borrowing options.
FR: Does technology-led service – or service in general – offer a key differentiator in the later life space?
I think it’s worth viewing service (and especially technology-led service) less as a differentiator, and more as another way to help deliver great outcomes. That was our mentality when we overhauled our online application last year and created a platform which aimed to capture more information upfront, reducing additional queries from our side and helping to speed up timescale to offer. Adviser feedback to date has been that it’s achieved that, which we’re all naturally pleased to see.
Similarly, our online account management platform for customers, MyPure, was intended to give our existing customers more options when it comes to some of the key elements of their lifetime mortgage and reducing their reliance on our office-based staff for processes such as making repayments and submitting certificates of continuing occupancy. Again, this has worked well since its launch, and we recently saw over 5,500 registered users.
FR: You’ve released figures recently suggesting later life lending is appealing to a broader audience and resonating with owners of higher value homes – do you think this will continue?
I can’t see any reason why not, and as an industry we’ve been in something of a virtuous circle in recent years of product development and a diversified customer base when it comes to demographics and priorities.
Our recent figures for Q1 show one in five people are using released funds for cars and holidays, and one in five new plans are coming from owners of properties of at least £550,000. Not only does this underline the need to produce solutions that cater for a range of needs, but it also helps to dispel the notion that later life lending is the resolve of needs-based borrowers from lower socioeconomic backgrounds.
I think the important thing is that, as an industry, we understand these customer trends and feed it into future developments to ensure we continue to meet a wide array of customer needs when they decide that later life lending is something they want to explore.
