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Tighter lending could increase need for family support – Wilson

by: Stuart Wilson, CEO of Air Group
  • 02/11/2020
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Tighter lending could increase need for family support – Wilson
What will the future hold for the mainstream mortgage market?


As someone immersed in the later life sector, that might seem an odd question to ask but there’s an inter-connectedness within the mortgage market and what happens in the wider market undoubtedly impacts on other specialist areas.

If you’re looking for an answer then what about: higher mortgage pricing, tougher criteria and reduced access to higher loan to value (LTV) mortgages.

These are not my own predictions for what borrowers and their advisers are likely to face in the months ahead, but those of the lenders themselves, via the Bank of England’s own Credit Conditions survey.

Advisers will probably say this is a picture of the here and now already, but the indications are from lenders that their approach to lending will remain resolutely cautious as they wait to see just what impact Covid-19 will continue to have on the UK’s housing market.

That caution within the mainstream may well provide something of a catalyst for those who can offer a multi-generational advice approach.

As we’re all acutely aware, those three ‘future’ approaches to mortgage lending are likely to lead to more use of family support, with the big question being how might they fund the deposits of their offspring and help them onto the ladder.


Explore offering equity release advice

Equity release could be one route older homeowners may wish to take and for advisory firms who are able to offer regulated advice to the parents or grandparents and the children, there are clearly opportunities to be explored for mainstream and equity release.

Smaller advisory firms might feel however they are not in position to secure access to the growing number of later life lending customers and these firms would clearly have to introduce and refer on to a specialist.

But for those looking at diversifying their offering, this could be an opportunity to bring on board a specialist equity release adviser or train up one of your existing advisers to do the job.

Part of our focus as a distributor is to help smaller firms in exactly this position and having that support and resource to draw upon might well embolden them to move into this space and diversify.

Clearly, there is much to think about but with the right training and development and much more, firms who currently feel they are mainstream-only operators, should be able to add another string to their advisory bow.


Multi-generations common

There’s no doubting that later life lending and equity release will require a firm’s constant attention, and they will need to remain focused on delivering the very highest standards of advice.

But it is possible to achieve this, especially with the level of support that is available.

We all know there is a far greater likelihood of there being a multi-generational element to a housing transaction these days.

Increasingly older homeowners are utilising their equity to help their family into their own properties.

It’s achievable but it needs a multi-disciplined advisory firm to cover off all angles – perhaps now is the time to move your firm into that space and benefit from what is likely to be a growing opportunity for many years to come.


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