This month we are sitting down with Leon Diamond (pictured), chief executive of later life specialist LiveMore. He founded the firm in 2019, with the company now offering standard capital and interest, standard interest-only, retirement interest-only and lifetime mortgages.
Prior to that, he was the founding partner at Mansard Capital Management, working there for over 13 years.
Q: LiveMore launched into equity release earlier this year. What has the take-up/response been like?
A: Take-up has been strong since we started offering equity release towards the end of Q1, 2023. About 20 per cent of our origination is now equity release but then our products are different to others. We have the widest property criteria in the market, and we’re looking to expand that further still, so that borrowers with properties deemed unpopular by most lenders can get a chance at a decent mortgage.
The advantage that we have over other equity release lenders is that we’re balance-sheet funded, so we don’t have to rely on insurance or pension companies to set the criteria for our equity release products. Instead, we have the freedom to set those criteria ourselves. So we will continue to innovate as we continue to receive feedback on the equity release market and the changing needs of brokers and customers.
Q: Where does LiveMore see the biggest opportunities and challenges in the market in the near term?
A: The biggest opportunity will continue to be the challenging financial environment that’s affecting everyone, including the over-50s market. Specifically, the cost-of-living crisis and changing interest rates are putting a lot of strain on finances, and since this age group continues to be underserved, there is a lot of opportunity for brokers to help.
With Consumer Duty in play, lenders and brokers have the opportunity to provide clients with holistic advice – not just around equity release in one silo, but they can look at other products for the over-50s such as a retirement interest-only mortgage, an interest-only mortgage and even a capital and interest (repayment) mortgage. And all the multiple hybrids of those.
Customer demand is at an all-time high now. The challenge, however, is that borrowers coming to mortgage brokers today typically have quite complex cases. So, to meet customers’ affordability needs, brokers need to really understand not only what a customer’s income looks like now but how it’s going to look in retirement.
But it’s hard for brokers to give valuable, holistic advice to older clients if they don’t have the right tools. Sourcing platforms are too simplistic to offer a truly meaningful affordability assessment and brokers need to run multiple assessments so they can demonstrate full consideration of all options, alongside Consumer Duty requirements.
So, we developed a really simple but complete, go-to broker platform for later life. It provides a full view of all suitable later life product options for a client, with only a single submission. Brokers can quickly and easily find the right product match for each individual customer, even with all their complexities.
Q: LiveMore has written a white paper on Consumer Duty and said that it will be a positive for the sector. What are the biggest changes it will make to the later-life lending sector and are they all positive?
A: Yes, Consumer Duty should see lots of positive changes in the later-life sector in four areas highlighted in the FCA’s Later Life Lending Review (September 2023).
It found that many older borrowers were sold the wrong product because firms had, first, poorly considering borrowers’ income and expenditure, they had then minimised discussions around alternatives, third, they had incentivised sales potentially at the expense of quality advice and good customer outcomes and, finally, steered outcomes in favour of lifetime mortgage products, or equity release.
All of these things will have to change so that customers get better outcomes. Instead of lenders trying to fit customers into their products, they’ll have to focus more on customer requirements and fit the product to the customer. We have 120-plus products that sit underneath our four key mortgages, so we can agnostically match the appropriate product to the person – not the other way around.
Q: LiveMore recently secured agreements with five more packagers to widen distribution. Are there any more agreements on the cards or areas of distribution that you are looking to build on?
A: We’re looking to continue to build strong relationships in the market, working with the five key packagers – Brightstar, Complete, Brilliant, TFC and Impact – and building deep relationships and strong customer outcomes with them.
Q: Later-life lending activity has dipped over the past few months, do you think this will recover in the short term or does the market have to adjust to a new norm?
A: While the market had dipped for about a year, it looks like it’s picking up again. The underlying demand of the customer is there – there is about £140bn worth of interest-only customers whose mortgages are coming up for refinancing at term-end.
Q: The FCA review into the later life sector highlighted some key issues. Do you think it will lead to significant change or heightened oversight?
A: Yes, the FCA highlighted those four key areas I just mentioned that need to change so that borrowers aren’t sold the wrong product. And the FCA seems to be starting to take a stronger view of non-compliant brokers. That has already begun in the equity release space.
Ultimately, the FCA’s stressing of these issues will lead to better customer outcomes. So we are working with brokers so they can get the right product for their customers. Brokers need to understand all the other options – not just equity release – that customers can pick.
For example, if a broker inputs customer details on our website and the product they’ve selected isn’t suitable for their customer, our engine will counter-offer with other products that would potentially be suitable for this particular customer. That’s the joy of having 120 plus products specifically for the over-50s market.
Q: Regarding pricing, do you think there is a risk with certain products like equity release where the interest roll-up period is shortened due to high interest rates that it could put more borrowers at risk?
A: Higher interest rates will eat away at equity, yes, so brokers need to provide holistic advice to borrowers, so they can make sure that equity release is the right option for them. While it might well be the best solution for some borrowers who want to take out cash and stay in their home, it’s not the best option for everyone.
What the FCA review really highlighted is the need for equity release advisers to consider people’s income and expenditure, and consider other products, not just equity release. For example, some over-50s borrowers may be better suited to a standard interest-only mortgage, a retirement interest-only or a capital and interest (repayment) mortgage.
Q:LiveMore is one of several firms that have had to cut staff in response to the market downturn, do you think other firms will have to rightsize as well, and what are the implications of that for the sector?
A: For us, it has made us more efficient and stronger than ever. We’ve brought in some great people and are looking to grow in 2024.
We’ve spent the year making great innovations with technology and products, and the impact of that for brokers is significant. For example, with our 120-plus products, if brokers get rejected for one, we can suggest another, making their case easier to place.
Q: LiveMore has added several features like counter-offers and automated DIPs, and later-life affordability calculator to its proposition. Why are such features important, are there any other updates on the cards and does the sector as a whole need to be more innovative?
A: Counter-offers, automated DIPs, and the affordability calculator all support Consumer Duty requirements by providing the over-50s with suitable products that they understand, that can be easily presented to them. They get a fast decision, and they get a product that suits their current life situation, depending on their personal requirements and financial situation.
We will be rolling out more products in 2024, broadening our proposition and increasing affordability. We also plan to further widen our property criteria, so people who are usually turned away because of an aspect to their property that is unpopular among most lenders, could potentially get a ‘yes’ from us.
Yes, the sector as a whole needs to be more innovative when it comes to using technology and developing products that address the high costs and interest rates in this financial environment, so that customers get a better outcome.
Q: Earlier this year LiveMore secured funding from Citi, will it be looking to expand its fundraising and what is the funding landscape like currently?
A: In March / April 2024, we’ll be securitizing our first portfolio – with Citi. We will continue to expand our senior funding and strong relationship with Citi. Plus, we’ll be looking for other types of product funding as we grow our business – like forward flow funding in the equity release space.
Q: If you wanted brokers to have one key takeaway from LiveMore, what would it be?
A: LiveMore makes your life easier by matching hard-to-place cases to the appropriate product.
