In 2016, the market was worth approximately £2.2bn, with industry experts predicting it will reach £3bn in 2017. This staggering figure highlights the changing demographic of our nation and the subsequent need for the housing industry to adapt its services in order to meet the evolving demands of its customers.
As many members of the older generation approach retirement, it is not uncommon for individuals to find themselves in need of a cash injection. Fortunately, the housing market is well aware of this development in its customer demographic. A number of mainstream lenders have led the way for the future of later life borrowing. Just recently, Santander increased its maximum interest-only mortgage lending age from 65 to 70 years old. As people are continuing to live longer, it is only right that lenders respond appropriately by expanding their services to meet the needs of older customers.
When it comes to retirement borrowing, the equity release market has experienced an overwhelming rise in popularity over the past couple of years. The success of lifetime mortgages has sky rocketed as many older borrowers are recognising the benefit of freeing up capital that is tied up in property. This injection of tax-free cash, either as a lump sum or in smaller amounts as and when an individual needs it, could be used to fund home improvements, for a holiday or even to help relatives get onto the property ladder.
Needless to say, equity release has taken the retirement borrowing market by storm and its growing success suggests that it is likely to stay. It is important that brokers seriously consider entering this progressive and ever-expanding sector and adapt their services to meet all of their customers’ varying requirements. Brokers must seize the opportunity offered by this market to expand both their business and their expertise.
Although the retirement borrowing market is flourishing, more still needs to be done to ensure it reaches its full potential. Not only do brokers need to widen their expertise and services in order to remain relevant to all of their customers, but the industry also needs to see an expansion in the number of appropriate homes being built for retirement. It is shocking to see that only 2% of the UK’s housing stock is purpose-built for retirement. Given the fact that people are continuing to live longer, this huge disparity needs to be addressed sooner rather than later.
Jeremy Duncombe is director of Legal & General Mortgage Club