It is undeniable that the equity release market has had a strong start to 2016 – nearly £400 million was lent in Q1, an all-time record – and I am confident that the lifetime mortgage is here to stay. As an industry we should therefore be looking to the future to see how we can further improve our products, our advice and, more importantly, the lives of our customers.
Traditional mortgages are central to the lives of millions. They are, for most of us at least, the biggest debt we ever take on. And yet for first-time buyers, securing a mortgage is often one of those moments to look back on with fond memories. It’s a serious step in life, as for many prospective homeowners getting approval on a mortgage can be an arduous and stressful task.
However, for the older generation who have had mortgages for many years, the same can become true. Post-MMR, many older people have found it difficult to secure a mortgage that stretches into retirement. But now the tide is turning.
More and more lenders in the mainstream mortgage market are waking up to the fact that older homeowners are crying out for retirement lending, and some lenders have acted accordingly by raising their maximum ages as high as 85.
Traditional equity release is perfectly placed to run alongside lending in retirement within the mainstream mortgage market – but there needs to be change.
When Bower Retirement Services issued its quarterly adviser tracker, 37% agreed that plans allowing customers to transition from mainstream mortgages directly into equity release would be ‘the most important product development for the future’.
To put this into context, twice as many advisers surveyed believed that plans allowing retired homeowners to switch from residential mortgages to lifetime mortgages would be more important than cutting interest rates. However, customer understanding of the nature of equity release is essential.
To truly influence the lives of older homeowners for good, the mainstream mortgage market and the equity release market must begin to work more closely. I can foresee the end of equity release being deemed just a niche corner of the mortgage industry and becoming a logical option for those who could benefit from the features of a lifetime mortgage, but for that to happen we must collaborate and work together to create products that our customers both understand and require.