Victoria Hartley, group editor of Mortgage Solutions and chair opened the hour-long debate by confirming that new equity release business topped £900m in Q1 2019.
Brokers chipped in that while the period over Christmas 2018 was strong, rather than the usual seasonal dip in activity, the New Year had failed to bounce as fully as they’d hoped. The market in Q1 did not live up to brokers’ expectations.
“It’s a competitive marketplace between lenders and brokers. People are aware that it’s advice-led and are shopping around more than in the past,” one broker said.
However, some smaller and one-man-band firms, particularly, have found it a challenge to keep up with demand others said. In response, lenders have been introducing new service options such as technology that makes use of mobile phone notifications, useful for brokers on the road.
The advisers agreed that equity release was a good opportunity for them because customers require advice and there was less chasing around about proof of income and that affordability checks are not required as with a mortgage.
“The information on criteria provided by lenders is generally good and lenders are providing a good service,” said one broker.
One participant was curious as to whether there may be funding available for an equity release product that produces a fixed income per month. However there are challenges as to what brokers’ returns could be in such a situation.
“The drawdown product is near enough the same so why not use that?” said one broker.
“And monthly fixed income can affect benefits payments. So there is uncertainty over whether there is much by way of demand for that,” the broker added.
The Martin Lewis effect
The discussion moved on to market intelligence that a large lender is mulling whether to start an advice-giving service for its own products. However the brokers around the table said they believe customers are beginning to understand the value of independent advice in this area.
Television advertising that emphasises whole-of-market advice and ensuring choice, is believed to have increased awareness among customers about what advisers can do.
One broker said: “I saw the money expert Martin Lewis on TV and he said that has changed his mind and is now more positive about equity release. He urged viewers to use a member of the Equity Release Council, take whole-of-market advice and only take out the amount you need.”
“People listen to him. That’s how our industry will grow and people will get that message,” the broker added.
However, other advisers warned customers about about taking a too easy-going approach to equity release.
“I say to clients, look, don’t follow everybody else. Do what’s right for you. It’s become fashionable to do equity release. Joe Bloggs down the road has done it and every website has a pop-up and you have the Key Retirement finance guys dancing down the road,” said one broker
“It’s not like that. It’s a massive financial decision. It has become the norm where it shouldn’t be. It’s a special request and it should be treated like that.”
Brexit and valuations
Our supper club guests said the market’s under performance had been affected by lower confidence as a result of Brexit. Property prices are less robust, even falling, and some lenders were asking to revalue after three months.
“Valuations are coming in lower than what people want, and some people are simply not enquiring at all in the first place,” said one broker.
As a result, a number of potential, ready to launch equity release and later life lenders are thought to be watching and waiting.
“It’s seen as something people want to get into. If you’re an insurance company you’re definitely looking at matched assets,” said one broker.
The discussion turned to the sensitivities of the equity release market and particularly the potential vulnerability of older clients.
“We give legal advice and we check, at that point, that they completely understand everything that they’re entering into. It’s a mix. Sometimes you get to that appointment and the person is like, ‘I don’t understand all of this’. At that point, we’re like, ‘whoa, we can’t go any further’,” said one broker.
The challenges often reflect a pattern that a married couple wants to do equity release and often, one partner tends to understand the paperwork better than the other. The conversation noted that many products do now offer early release for free on first death or first party moving into long-term care.
“It’s a lifetime mortgage, therefore these are nice features so that the client doesn’t feel like it’s a massive ball and chain for the rest of their life,” said one broker.
Pure Retirement started to provide Nationwide’s lending and servicing in April 2019. It’s an in-house proposition for the society’s advisers. It’s not funded by Nationwide, however, but through a deal that Pure helped to instigate a number of years ago.
The arrangement has seen Pure grow in six years from launch to offering the servicing facility for one of the biggest building societies. “If Nationwide can go out and spend the money on marketing it will be massive. They’ve got a serious proposition, said one of the attendees.
Nationwide gives advice and Pure looks after the valuation. Nationwide launched a whole later life proposition including equity release.
“The figures they want to achieve, if they do, will blow other equity release lenders out of the market. They have the reach and the trusted brand.”
And so the debate went on into the night, with cocktails and one of the most memorable and glamorous hot salted caramel and chocolate bombe desserts available in the South West.
The guest list
Richard Brazier, Dupree
Kevin Hurlow, Responsible Life
Jon Keast, Age Partnership
Neil Reynolds, The Right Equity Release
Joe Stallard, House and Holiday Homes Mortgages
Mark Stallard, House and Holiday Homes Mortgages
Chris MacMahon, Responsible Life
Andy Vickery, Money Release
Kelsey Ross, Equilaw Kelsey
Millie Stevens, Equilaw
Chris Flowers, Pure Retirement (hosts)
John Wilson, Pure Retirement (hosts)
Hattie Tales, Pure Retirement (hosts)
Danielle Dennis, Mortgage Solutions
Victoria Hartley, Mortgage Solutions (chair)
Oonagh Sheehan, Mortgage Solutions
Thanks once again to Pure Retirement for hosting the evening and all our guests on the night.