From an advice perspective, it’s a conversation which can take many different forms to cover various stages of a borrowing cycle and is not just one which should be left until the twilight of these borrowing years. After all, successful financial planning is key for all borrowers, and the earlier this can be provided the better.
However, as is often the case concerning many financial products and services, there remains room for improvement in terms of how these complex, emotive and sometimes difficult conversations are initiated and supported. And it’s clear that we, as an industry, have to work hard to provide a wider platform to deliver easily accessible information around the differing aspects of later life lending.
Opinions of later life lending
In the latest instalment in our webinar series, we focused on an exploration and explanation of later life lending in a bid to shed further light on the current performance and perception of the sector throughout the property market. Its growing prominence was immediately evident in the first poll of the day, with 84 per cent of property professionals highlighting its importance within the wider UK mortgage and residential property market.
Breaking down these responses, over half (54 per cent) suggested that the later life lending sector was ‘very important’, with under a third (30 per cent) expressing that it was ‘somewhat important’. Only five per cent said that the sector was ‘not very important’ with 11 per cent implying that it was ‘neither important nor unimportant’.
Delving deeper into later life product offerings, when quizzed on what equity release could be used for, 40 per cent of respondents indicated home improvements, 36 per cent said to supplement income, 32 per cent to clear unsecured debt and 30 per cent to capital raise for any legal purpose, for example tax bills, inheritance tax (IHT) planning, holidays etc. A further 26 per cent cited to repay a mortgage, with the same proportion (26 per cent) saying to embark on a property purchase.
Always a need
These findings show just how vital an active later life market is for older homeowners.
Given the average UK homeowner has £222,526 in equity, many will find property is their largest financial asset, able to bridge the gap between their pension savings and the challenges of later life when incomes typically decline.
Despite this growing potential, like much of the wider mortgage market, activity levels have diminished over the past 12 months. However, on a far more positive note, the latest figures released by the Equity Release Council show that the market has seen growth for the first time in a year with quarterly increases in both new customers (10 per cent) and total lending (eight per cent).
Total equity release lending was reported to have reached £716m in Q3, loaned to 7,379 new customers and 8,466 returning drawdown customers.
When commenting on this data, David Burrowes, chair of the Equity Release Council, said: “Looking ahead, we must be wholly committed as an industry to putting equity release in its proper context as one of a range of later life lending options and putting property wealth in its proper context at the heart of every retirement planning conversation.”
This feels like an apt sentiment to close on, and the encouraging thing is that property professionals and intermediaries appear to have a growing desire to become more informed about an area of the market which will only continue to rise in prominence in the coming years.