Speaking to Mortgage Solutions at the Air National Later Life Lending Adviser Conference, Glynn said at the beginning of the year advisers knew they would be tackling two issues; rising rates and restrictive loan to value (LTV) limits.
He said advisers had done a good job at managing the first problem of the interest rate risk and now, “a lot of work is being done with lenders to solve the second one”.
He said: “If you think of the way the annuity market changed when pension freedoms changed, it wasn’t a journey into one product or another, it was a journey through a number of different products.”
He said Air would help the market through the changes by making it easier for an adviser to identify where a client sits on the spectrum of the products that will become available.
“To retirement interest-only (RIO), to these new hybrid products to partial payment equity release into full fat equity release, Air will build something that will enable advisers to put a client status together which says depending on what they can afford to pay, they’re either at the mortgage end or at the equity release stage.
“We’ll make it easier for equity release advisers or mortgage advisers to decide where clients are on that spectrum.”
When asked if the new products would be the last stage of innovation for the sector, Glynn said there was more to come.
He continued to say that a “deep change” in the market, such as that seen at the end of 2022, tended to drive different types of innovation. Currently, lenders are putting a lot of “investment, time and effort into addressing the LTV problem,” Glynn said.
With Consumer Duty in mind, a residential mortgage broker who identifies a client that needs equity release, an audit trail would be needed for referral and Air’s tools will make it easier to produce this.
“Air can help bridge all of that,” Glynn said.
Glynn said the new products would create an “evolution of attitude” among advisers and could bring some into the equity release space. He said Air also had the challenge of bringing residential mortgage advisers into the sector, and would be doing this through its Academy and newly-developed modules.
He added: “We’re going to build out from the existing modules and invest in Continuing Professional Developmnet (CPD) content and more heavily in masterclass content.”
Glynn said the company would also bring in lender expertise to members as well as equity release exam content.
A subdued market
Glynn said case sizes had fallen this year too, and alongside this, Air had worked with advisers to help them manage their attitudes to higher rates. He said regarding LTV availability, there would be “snapshot changes in risk” to the appetite of lenders where products would come in and out of the market.
He pointed to Just’s recently released higher LTV product, which the lender admitted may be available for a limited time. Glynn said this would help bolster product choice in the second half of the year. Then, in Q4 the new products would “give another lift as they start to get released” which would put the market in a “better position for 2024”.
Despite the product changes in the market, Glynn said Air’s sourcing system showed that advisers were still bringing clients to the market based on the products that were available, and were probably not getting enough credit for the “great job” they continued to do.
Glynn said the drivers of the market were still healthy, but the sector needed to make it easier for advisers to find solutions and give advice.
Otherwise, he said there would be an emergence of a focus on further lending.
Glynn added: “It’ll be an environment where there’s not as many new plans being written, and people are on lower rate plans that don’t need refreshing. We’ll see a bigger focus from advisers on further advances.”
An exciting time
Glynn said Consumer Duty would give Air an opportunity to build deeper relationships with firm principles, including the development of a principles area on its platform with a step-by-step guide and access to lender documentation. This will be built on, so the group has more of a relationship with firms, as well as advisers.
When asked about the lack of awareness among clients towards Consumer Duty, Glynn said advisers should be open and confident about the work they were doing to improve the customer experience and where they feel they are adding value.
“There is a value to the advice that they are giving, and sometimes that gets lost if you’re in a proc fee world where you don’t sit and think about the value of what you’ve actually put together. What it takes to build a business, to invest in the amount of learning required to be an expert in this field to then build out the knowledge in the ancillary markets, and then to be a specialist in dealing with older people. That takes time and has a value,” he said.
Glynn said with Air being the “go-to” company for Application Programming Interface (API) deployment, the firm would also look at how to make it easier to release new products.
The firm will also encourage brokers to use one platform during the mortgage process, as many still sourced products and created suitability documents on different platforms.
