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Legal and General projects £6bn lifetime mortgage market by 2020

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  • 09/08/2018
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Legal and General projects £6bn lifetime mortgage market by 2020
The insurance housing and investment company Legal and General confirmed it lent 23% more lifetime mortgages in the first half than last year at £0.5bn, partly due to the increasing wealth and numbers of UK retirees, and raised its prediction of the size of the lifetime market from £4bn to £6bn by 2020.

The interim results confirmed product innovation is expected to boost market volumes in individual annuities and lifetime mortgages, it said, after lending £100m more than last year, handing it a 28% market share since launch in April 2015.

The housing and insurance giant said: “We anticipate total lifetime mortgage market volumes of over £6bn by 2020, up from £4bn [originally] forecast for 2018.”

In July 2018, L&G announced a five-year partnership agreement with Virgin Money to provide lifetime mortgage solutions to their interest-only customers approaching retirement.

 

Legal & General Mortgage Club

Legal & General Mortgage Club facilitated £35bn of mortgages in H1 2018 up from £29bn in 2017. It attributed this to strong partnerships with top lenders and over 9,000 mortgage brokers.

It said: “As the largest participant in the intermediated mortgage market in the UK, we are involved in one in five of all UK mortgage transactions.”

Meanwhile, Legal & General Surveying Services delivered a strong performance, completing about 266,000 surveys and valuations.

Cala Homes

L&G’s housing focus will stay on build-to-sell, later living and affordable housing and, since the full acquisition of a 52.1% stake in Cala Homes in March 2018, has increased its house building capacity and said it is positioned for ‘further growth.’

To June 2018, Cala Homes delivered growth with revenues up 14% to £850m, from £748m in H1 2017. Completions rose 29% to 2,171.

It said: “Being both a developer and operator gives both good alignment with our customers and a more stable revenue profile relative to developer-only business models.

“Working closely with LGIM Real Assets, LGC will continue to apply capabilities in commercial real estate, residential property, infrastructure and clean energy to work with partners in cities around the UK as they develop their urban environments.”

It also continues to establish relationships with third-party private capital and development capacity to “be both socially useful and economically useful”.

It said LGC’s affordable homes business aims to be fully operational and delivering 3,000 homes per year within the next four years.

 

 

Fintech advances

 

L&G established a fintech business within Legal and General Insurance. It includes Investment Discounts Online (IDOL), and other collaborations and or funded start-ups.

The investment in SalaryFinance, a fintech business providing a financial well-being platform to employees, will further enhance its growth potential by entering the US market in H2 2018 and by expanding the products available on the platform.

Last month, the fintech business made a £3m strategic investment into Smartr365, a digital B2B mortgage broking platform.

“We will be working with Smartr365 to scale up the business and innovate using technology to enable mortgage brokers to become much more efficient and provide better customer service. The fintech business is also collaborating with our leading surveying business to enhance the services it offers to the mortgage market.”

In the interim report, L&G confirmed operating profits up 7% to £1,059m in H1 from £994m.

Fiona Cincotta, senior market analyst at Cityindex, said:

“Legal & General’s underlying business continues to perform reasonably well and its dividend has been hiked 7%, maintaining its status as one of the UK’s best yield plays. The general insurance division was always expected to take a hit from the Beast from the East. Otherwise, the rest of the company’s divisions have all grown their operating profits.

“The lifetime mortgages market is proving to be a promising new business line for the company, as cash-poor retirees look to unlock value tied up in their homes.”

See our exclusive interview out today with Mortgage Club director Kevin Roberts.

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