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Property values and borrowing asks are highest I’ve seen in lifetime mortgages – Powell

by: Stuart Powell, managing director of The Ocean Mortgages Group
  • 30/07/2021
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Property values and borrowing asks are highest I’ve seen in lifetime mortgages – Powell
The equity release market showed a considerable increase in the amount of money borrowed and the average amount released in H1 2021.


The amount of new equity released rose by 32 per cent to £1.94bn, up from £1.47bn in H1 2020.

The average customer took out £94,982, up 34 per cent from £74,014 in H1 2020.

We have certainly noticed this massive increase over the past six months. 

When one of our team, Nadine, ran into my office last month with an excited look on her face saying, “I have a lady on the phone who wants to borrow £7m,” half of me thought it was a wind up. 

I took the call and spoke to a lovely lady who lived in a £25m property and had a first charge mortgage coming to the end of its term later this year and a second charge loan which expired next year.

The well-worn phrase “property rich and cash poor”, could have been created for this lady and her husband. They had a fantastic home which they had lived in for many years but no assets and limited income.

No residential lender would look at the case. However, several lifetime mortgage lenders were keen to speak with their funders to see if they could help.

As the clients had lived in the property for many years, loved the location, land and gorgeous home they had built, they really did not want to downsize. At the time of writing, I am still awaiting two lenders to come back to me once their funders have considered the application.


The Equity Release Lady

We have built a good reputation in the industry, so higher net worth clients do tend to approach us. Our average loan has always been around £200,000.

Due to the high number of enquiries we are seeing across the country, we have started new company The Equity Release Lady to sit alongside Ocean Equity Release to cope with the high demand. The companies will both operate a franchise model, which means that wherever clients live, they will be able to get advice from a qualified adviser supported by our team.

The new company will be run by Samantha Bickford as managing director. Samantha’s view is that, with demand for lifetime mortgages at the upper end of the market growing rapidly, and with independent financial advisers increasingly considering clients’ property as part of their holistic advice, business will only increase.

I agree. I’ve never known so many lifetime mortgage enquiries where the client’s property value was as high as they have been this year, or where they wanted to borrow as much.


Careful underwriting is crucial

Cases we’ve seen this year have included clients wanting to borrow £1.4m, £703,000 and £700,000.

All these were clients remortgaging at mortgage deal-end. As well, purchases using loans of £337,000 and £314,000, and a £330,000 loan for a payment as part of a divorce settlement. Reasons for borrowing are varied but increasingly high value remortgages, inheritance tax planning and divorce settlements are featuring.

The future looks bright for the lifetime mortgage industry.

However, it does seem that the higher the loan amount, the more difficult it is to place. As lending for equity release is based on loan to values, and funders are quite risk averse, finding the right deal for these mega-loans can prove quite tough.

With fewer than 10 lifetime mortgage lenders operating currently, and although the number of available products has increased, more flexibility and an ability to underwrite each case on its own merits will become crucial for market growth to continue.

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