According to Just Group’s latest financial report, in 2023 the lifetime mortgage market contracted by 58 per cent to £2.6bn
The company said that it continued to be “selective” and “use our market insight and distribution to target certain sub-segments of the market”.
It continued that lifetime mortgages were still an “attractive asset class”, but in a higher-interest-rate environment, the capital charge attaching to the no-negative equity guarantee risk “becomes onerous”.
“Prior investment in lifetime mortgage digital capabilities and proposition has been well-received by financial advisers, resulting in retention of our five star service award,” Just Group said.
The underlying operating profit rose by 47 per cent year-on-year (YOY) to £377m, which was driven by “significantly higher new business and in-force profits”.
The company said that it was confident in its ability to deliver 15 per cent growth in underlying operating profit and it was forecasting an underlying operating product to come to £211m in 2024. This is at least double 2021 levels.
‘Normalisation’ of long-term interest rates will drive demand
Just Group said that the economic outlook “continues to evolve” due to the trajectory of central bank rates and a UK election by the end of the year.
“The 2022/23 interest rate increases have led to a flatlining of the economy in 2023, predicted to be followed by a gradual recovery. We expect these macro forces to have a negligible effect on the group’s business model, with the normalisation of long-term interest rates continuing to drive demand for our products,” it said.
The company added that it was “closely monitoring” the government consultation regarding restriction of ground rent for existing residential leases announced in November 2023 and the impact of this on its £176m portfolio of residential ground rents.
Just Group said: “We have a strong and resilient capital base, with a low-strain business model that is generating sufficient capital on an underlying basis to fund our ambitious growth plans, whilst also paying a shareholder dividend that is expected to grow over time.”
Just Group has a ‘growth mindset’
David Richardson, Just Group’s CEO, said: “We are delighted with our financial performance in 2023, a record year for the Group, and are confident of exceeding our medium-term profit growth pledge. As such, we now expect to achieve our target of doubling profits in three years instead of the originally intended five.
“Given the multiple opportunities available and strong structural growth drivers in our chosen markets, we have never been more confident in our ability to deliver sustainable and compounding growth.
“We have a growth mindset and we’ve developed a winning formula – one that will ensure we fulfil our purpose, to help people achieve a better later life, while building substantial value for shareholders.”
