Speaking at wide-ranging Mortgage Solutions Masterclass session on 31 October, Darren Deacon, head of intermediary sales and Nathan Waller, business development manager at Family Building Society were clear that, with an aging population, increased pension freedoms and house prices rising quicker than incomes, there was a growing need for lending into later life.
However, the opportunities in the market would only be realised if all those within the sector – brokers, lenders and customers alike – educated themselves on the intricacies surrounding the later life lending sector.
Within the presentation, Waller and Deacon highlighted nuances such as how different income could be used to finance loans; the power of manual underwriting; and the importance of using standard mortgage products rather than rushing immediately to equity release.
Education, education, education
Deacon noted that the market for later life lending was rising as the population aged. He said: “Residential lending where the term extends into retirement accounts for 60 per cent of all lending. This demonstrates the size of the market. These people will still need a mortgage or some kind of borrowing well into later life. So you can see the size of the opportunity.”
Deacon also highlighted the fact that there were a variety of diverse factors behind borrowers’ decisions. These included their own aspirational needs, changes to pensions as well as providing for their children and grandchildren.
He said: “People aren’t ready for the pipe and slippers. They want to use their homes to benefit themselves and their families.”
Meanwhile Waller did not shy away from listing the challenges that exist for each segment of the market. For lenders, purchase business had slowed and swap rates, until recently at least, had been rising sharply; for brokers, there have been frequent rate rises and product changes; and customers were being restricted by tighter affordability and stricter criteria.
Waller said: “It’s a tricky time across the whole industry but the quickest way to overcome these challenges is with education. This is a key time for advisers to show their worth to their clients.”
And in terms of education, Waller was adamant that advisers played a vital role in the process and said that those who can take a more hands-on and knowledge-driven direction would reap the benefits.
He said: “Advisers need to create a more manual approach. To explore what customers have built up. This means looking at pension products – for example, asking if clients have a SIPP or a SASS; exploring investments; using a client’s buy-to-let properties or company directorships. It’s all about advising on a client’s circumstances, not just for now but for the future.”
Watch the full video below, hosted by Nick Cheek, managing editor at Mortgage Solutions, Darren Deacon, head of intermediary sales and Nathan Waller, business development manager at Family Building Society
