Pure Retirement

Pure Retirement has introduced desktop valuations to its Heritage and Sovereign ranges, with the lender saying from today the majority of its lifetime mortgage products are now accessible.

Loan to values (LTV) are limited to a maximum of 49.5 per cent on its Heritage range and can be applied for on traditional construction properties valued between £100,000 and £750,000, and up to £1m inside the M25.

Sovereign products have a maximum 34.4 per cent LTV on properties valued between £70,000 and £750,000 around the country and up to £1m within the M25.

For both product ranges, flats and properties in proximity to commercial premises will be considered although conditions will apply.

The products were previously available at maximum LTVs of 55 per cent and 43 per cent respectively.

The lender emphasised that it was open to business right through to completion, and its face-to-face legal requirements had been adapted in line with the changes made by the Equity Release Council.

Head of intermediary sales Chris Flowers (pictured) said the business had risen to the recent challenges, adapting to the unique and unprecedented circumstances faced in the industry.

“Our teams have worked hard to find solutions to the recent problems faced by all, and their solid efforts have once more produced effective solutions for advisers and their customers,” he said.

“It’s enabled us to not only continue operating as close to normal as possible, but in a manner that’s streamlined, secure, and which simultaneously considers the safety of our workforce and the ever-important needs of our customers.”

Legal & General

L&G Home Finance has also introduced desktop valuations, doing so for all its lifetime mortgage products.

However, it is reducing the estimated value of a property by five per cent to accommodate potentially less information and is asking brokers to factor that into client property value estimates.

In its guidance to brokers the lender said: “A desktop valuation may provide us with less information than if the valuer was able to visit your client’s home.

“For this reason, we will use 95 per cent of the desktop valuation when we calculate the amount we can lend.

“To support this, you should temporarily change the way you estimate a client’s property value, by reducing their estimate by five per cent when you submit an application. For example if a property is estimated at £200,000 then you should base the product selection and application on £190,000.”

There are also further exclusions which include properties valued above £2m, new build properties up to two years old or being occupied for the first time and flats.

Purchase applications will also not be accepted following government guidelines.

Maximum LTVs vary by product and term, but the lender’s highest is now 63.9 per cent on a 25-year term on its income lifetime mortgage products.

For optional payment and flexible products the highest LTV is 53.5 per cent.

If a desktop valuation is not returned, the lender said it would close the case from the pipeline but will stay in touch with all advisers and once restrictions are lifted, it will re-consider the application.

It added that to cover itself without an in-person valuation it would not understand the state of the property until the restrictions are lifted.

As a result, clients will be required to sign a declaration at offer stage to declare they are not aware of any issues that may affect the valuation and there are no essential repairs required to their property.

The lender noted that subject to regulatory approval for the move, it would form part of its Retail Retirement division.

“Reflecting the company’s commitment to tackling the challenges for the UK’s retirees, the move is a response to customer demand for a Legal & General branded advice service for its lifetime mortgage products,” the lender said.

As part of the expansion, Grant Hughes has joined Legal & General this week to work with strategy and commercial director Sara McLeish in taking the plans forward.

Hughes was formerly head of financial planning at Mercer and CEO of Jelf Financial Planning.

Since 2015, Legal & General Home Finance has offered customers access to advice on its lifetime mortgage products through Key, formerly Key Retirement, operating under the brand name The Retirement Lending Advisers.

L&G said this relationship will continue through any transition arrangements and beyond.

“Key Retirement Group will remain an important strategic partner for Legal & General Home Finance, and Legal & General will continue to work closely with Key and with all of Legal & General’s other intermediary partners to bring access to later life lending into the mainstream,” it added.

Match demand with distribution

Legal & General Retail Retirement CEO Chris Knight said: “As a generation of asset-rich, cash-poor retirees increasingly look to release their housing wealth, demand for lifetime mortgages will continue to grow.

“While we will continue to develop new and innovative products, we believe the next challenge for this market is to match demand more closely with distribution.”

Legal & General Retail Retirement strategy and commercial director Sara McLeish added that the business was looking forward to continuing close collaboration with Key and all its intermediary partners.

Key CEO Will Hale said: “Having worked closely with Legal & General for more than three years to provide their customers with access to their range of lifetime mortgage products, we are very happy to continue to support them whilst they explore options and confirm their plans.

“We look forward to continued close collaboration with Legal & General as we both work to ensure that customers who are looking for advice and support around later life lending decisions receive the best possible service.”

Steve Ellis has been appointed as chief executive officer of Legal & General retail retirement living solution – a new division for the organisation which will be aiming to find and fund care for customers using its Care Sourcer platform.

Claire Singleton, currently CEO of Legal & General’s mature savings business (pictured), will succeed Steve Ellis as CEO of Legal & General Home Finance.

Both will report into Chris Knight, CEO of Legal & General retail retirement.

Ellis will start his new role at the beginning of April and Claire will take up her post at the end of the year following the completion of the transfer of the mature savings business to ReAssure, part of the Swiss Re Group.

Singleton’s appointment is subject to regulatory approval. Chris Knight will manage the Home Finance business in the interim period.

Ellis has been with the organisation since 2007 and has previously run a number of operational areas in corporate risk and annuities.

Singleton has been the CEO of the mature savings business since July 2018, having joined in 2011 from US law firm Jones Day.

She has worked in a variety of legal roles within the group, most notably as general counsel for retirement and then group, and Legal and General Capital.

Investment in Care Sourcer

Legal & General retail retirement living solutions will focus initially on helping customers find and fund the care they need for themselves or their elderly relatives.

L&G said its investment in Care Sourcer, a platform for the care market, would be a key focus. Ellis will be joining the board of Care Sourcer and will work with the existing executive team lending his expertise in scale and disruption.

Nigel Wilson, group CEO of Legal & General, said: “Claire and Steve have done great jobs in mature savings and Legal & General Home Finance.

“We want people to achieve longer, happier, healthier lives in retirement, but finding and funding care is the elephant in the room – it is a broken market that needs to be fixed. This is precisely the kind of challenge where Legal & General’s inclusive capitalism, our brand and balance sheet can make a difference.”

Steve Ellis said that he is looking forward to resolving the issues in UK care funding and provision.

Claire Singleton said that she is excited about joining Legal & General Home Finance later this year.

She added: “My current focus is on achieving a successful completion of the transfer of the Mature Savings business to ReAssure who will be an excellent steward of the business. As well as providing a smooth experience for our customers, my team and I are committed to supporting our employees through this transaction.”

For us as advisers and lenders, the task is to understand these plans and deliver options that can help customers meet their needs for retirement.

The changes which the Financial Conduct Authority (FCA) made to Retirement Interest-Only (RIO) mortgages were a welcome move that has been followed by a wave of RIO product launches.

Separately, lenders have also looked to the lifetime mortgage market to launch more flexible solutions that allow customers to make regular, monthly interest repayments.

So the last year has seen the market step up to give more support to more retirees, but we’re still far from mission accomplished.

Falling pension wealth

Whether it’s the end of final salary pension schemes or longevity, many more people are approaching retirement with smaller pension pots that they now need to make last longer.

In fact, the FCA previously found that nearly a third of UK adults have no private pension and even plan to rely solely on their State Pension.

These shifts in retirement have undoubtedly helped to grow the retirement lending market, with more and more consumers looking to their housing wealth to help pay for the retirement they want.

However, the near £4bn market we saw in 2018 remains just a drop in the ocean compared to the £1trn of housing wealth in the hands of the over-55s.

There are older homeowners who haven’t yet been switched on to the idea of unlocking their housing wealth.

Challenge retirement perceptions

I think there are two core reasons for this.

First, we must do more to challenge the perceptions about retirement.

The way we reach out to our customers and talk about retirement lending needs to recognise how different each experience of later life can be for every customer.

Whether it’s by phone, face to face or even through our advertising, our market needs to recognise the facts of modern retirement.

Research we conducted found there is a group of homeowners who want to use their housing equity in later life, but don’t want to access that wealth in large chunks.

They want to unlock equity as a regular income alongside annuities, investments and their state entitlements, as part of a tailored retirement plan to help them maintain their standard of living.

Improve distribution support

Second, it remains about distribution.

I believe there are thousands of potential customers who either haven’t heard about lifetime mortgages, or who continue to base their views about equity release on the market of the past.

The challenge over the next year will therefore be to boost distribution.

That means supporting more mortgage advisers to enter this growing market, with education, tools and a helping hand to encourage them to talk to their clients about later life borrowing.

Retirement lending has the potential to be a much larger market in the future.

But to maximise this opportunity, we all need to work together on supporting more mortgage intermediaries to raise awareness with their clients about lifetime mortgages, RIO and other retirement lending options.

The club has grown its lending facilitated by £20bn over the last two years, completing £73bn of mortgages in 2018, up 12 per cent from £65bn in 2017, which itself was up from £53bn in 2016.

Of the £72.9bn total, £59.9bn was non-retention with £13.0bn as product transfers – a 82 per cent to 18 percent split.

“We are transforming the housing ecosystem through our unique understanding of the industry as the largest participant in the intermediated mortgage market in the UK,” L&G said.

It highlighted technology development in the mortgage club with its SmartrCriteria and ClubHub software, and investment in the Smartr365 broking platform.

Equity release lending up

As part of Legal & General Group’s annual results there was also growth for its later-life lending, housebuilding, protection insurance and general insurance businesses.

The Home Finance arm, which lends within the equity release and later-life sector, completed £1.2bn of lending in 2018 – up 19 per cent from the £1bn total in 2017.

L&G estimated it had a 30 per cent market share last year.

It said the flexible drawdown product, which allows homeowners to keep loan to value ratios lower by only drawing the loan when needed, had helped to broadly double sales volumes since its full introduction in 2017.

“We anticipate total lifetime mortgage volumes of over £6bn by 2020, up from £3.9bn transacted in 2018,” it added.

Built 2,500 homes

In housing, L&G Capital’s housing businesses sold or completed for rental around 2,500 homes in 2018 and the firm said it would continue to grow its multi-tenure business across build-to-rent, build-to-sell, later living and affordable housing.

It took over full ownership of Cala Homes in March 2018, and with this increased house building capacity said it was “positioned well for further growth”.

Legal & General Surveying Services delivered 539,000 surveys and valuations last year.

“The traditional home buyers survey has been rebuilt for the digital world and has launched as SmartrSurvey, which is sold via business partners and directly to consumers,” L&G added.

Insurance premiums up

UK retail protection gross written premium income (GWP) increased 4 per cent to £1.28bn, up from £1.23bn in 2017 with new business annual premiums up to £175m from £172m.

“In H2 we expanded our partnership with Barclays launching a new non-advised proposition for family protection in addition to renewing the existing advised mortgage protection offering,” L&G said.

Meanwhile in general insurance, GWP was up 11 per cent overall on 2017 with growth across the range of channels and products.

This included three distribution agreements for its household insurance business which will be supported by its digital SmartQuote and SmartClaim propositions.

Profit up 10%

Overall, the L&G group saw operating profit rise 10 per cent to £1.9bn, up from £1.72bn in 2017.

It completed £10bn in annuity sales – £9.1bn in pension risk transfer sales and £800m of individual annuity sales. These were up from £3.9bn and £671m each respectively.

Group chief executive Nigel Wilson noted the business had been resilient and performed strongly despite 2018’s political uncertainty, asset market declines and slowing economic growth.

“We became the UK’s first £1trn investment manager, executed a record £9bn of pension risk transfer deals and invested billions in the UK’s future infrastructure and cities,” he said.

“Our strategy positions us well despite the broader environment, our current trading is strong and we expect this momentum to continue in 2019,” he added.

The launch comes after a pilot last year and will be supported by a television advertising campaign.

The loan is secured against the customer’s home and pays out a regular monthly income – instead of a one-off lump sum or drawdowns.

Income from the mortgage is designed to help people maintain their standard of living in later life and make the most of their active retirement years.

Interest rates are fixed for the life of the loan, with payouts of at least £200 a month over a fixed term of 10, 15, 20 or 25 years.

The TV ad airs for the first time today and aims to challenge the traditional view of retirement by showing how lifetime mortgages can help people to enjoy a more colourful life after work.

A series of four quick scenes, from spa breaks to modest home improvements, are designed to show how the product can enhance life for retirees.

Steve Ellis, chief executive of Legal & General Home Finance (pictured), said: “There’s no one-size-fits-all solution for later life, so whether it’s enabling our customers to make monthly interest repayments or to use their housing wealth to enjoy life’s little luxuries, we’re there to help them have a more colourful retirement.”

L&G Home Finance

L&G Home Finance’s one-day workshops are run by the Chartered Insurance Institute (CII) and will take place at the lender’s headquarters in Solihull in January, February and March.

The events are part of the lender’s strategy to further engage brokers in the market which it announced last year.

Speaking to Mortgage Solutions at the time, L&G Home Finance head of mortgage broker sales Marie Catch said: “We’ll be there to hand hold brokers through qualifications, support how they give advice in the market and getting leads to build their business.”

The workshop will cover topics including how to target appropriate customers, key equity release products and the alternatives available to potential clients.

At the end, candidates should be able to understand the principles of equity release and the types of schemes available, suitability and affordability of the different types of products, the risks to the consumer, and the application of suitable solutions according to the circumstances of the customer.

Catch added: “Retirement lending is a growth market in the UK and there are huge opportunities that we want to help advisers make the most of.

“In some instances, it can simply be helping intermediaries to take that first step into the market. Our partnership with the CII through these new workshops is just one part of our plan to open-up distribution and help the retirement lending sector to reach its full potential.

“We’re confident these sessions will give more advisers the support they want to start their journey into lifetime mortgages.”

Canada Life Home Finance

Canada Life Home Finance is running six workshops around the country in February at locations in London, Bristol, Southampton, Solihull, Manchester and Huddersfield.

The lender said they follow on similar sessions offered last year where more than 300 unqualified advisers attended.

The sessions are provided in collaboration with training and consulting firm Fortica and give advisers currently not qualified to offer equity release the training needed to pass the required exam.

The announcement comes ahead of the Equity Release Council’s publication of the 2018 lending figures for the equity release sector, which are expected to show more than £4bn was lent last year and a third record-breaking year in a row for the industry.

Canada Life Home Finance head of marketing and communications Alice Watson said: “The equity release sector is booming, and at Canada Life we have a key role to play in helping mortgage advisers meet this demand and support the market’s growth.

“As such, we’re organising another round of our in-demand workshops for 2019, supporting those who aren’t yet qualified to get the training they need to tap into the product’s growing popularity.

“We had a phenomenal response to last year’s sessions, with over 300 unqualified advisers attending and a second round of workshops being added in the summer to meet the demand we saw.”

It added that this series of exam workshops will be part of a larger range of events throughout the year.

Advisers expect growth

Expectations are that Equity Release Council figures due this month will show the market reaching the £4bn mark in 2018, up from £3.06bn in 2017.

In research with 100 independent financial advisers, Canada Life found 86% of advisers expect the value of the equity release market to increase further in 2019.

Two in five advisers expect the market to grow by £2bn alone in 2019, to top the £6bn mark by the end of this year, with 46% expecting more modest growth to be between £4.5bn and £6bn.

Just five per cent of advisers expect the size of the equity release market to decrease this year, while nine per cent expect it to stay about the same as in 2018.

This achievement comes on the back of results in the first six months of 2018 which showed lifetime mortgage advances up 23% on 2017 at £521m and a market share of 28%.

This growth means that Legal and General Home Finance is now responsible for one in three new lifetime mortgage originations in the UK.

Over 2018 Legal and General Home Finance has brought to the market a series of key product launches.

These include the Optional Payment Lifetime Mortgage (OPLM) which enables borrowers to make monthly interest payments, and the Income Lifetime Mortgage, giving customers the ability to use their housing wealth to provide a regular monthly income.

Additionally, the lender has also sought to assist UK’s interest-only customers by securing new agreements this year with Virgin Money and NatWest – following earlier tie-ups with Santander and The Co-Operative Bank.

Steve Ellis, CEO of Legal and General Home Finance (pictured), said that he expects customer activity to continue to be strong for the rest of the year.

“Brexit uncertainty, a muted housing market and the relatively fragile nature of the consumer economy will be hurdles we all need to overcome, but for this market to really reach its full potential we must strive to grow distribution.

“The fundamentals of demand for what we do are strong but brokers need to ensure that they have a holistic later life lending offering, and feel confident having these conversations with clients.

“It is our mission to normalise later life lending and support retirees across the UK to enjoy their best retirement. If we can double the number of advisers talking to their clients about lifetime mortgages, then we really will be well on the way to reaching the goal of making retirement lending mainstream.”

NatWest and other Royal Bank of Scotland customers who may benefit will be offered the opportunity to speak with The Retirement Lending Advisers (TRLA) for advice on whether a lifetime mortgage would be suitable for them.

L&G Home Finance already has similar deals in place with Virgin Money, Santander and The Co-operative Bank.

TRLA is part of Key Retirement Solutions only advises on Legal & General’s lifetime mortgages.

Option for interest-only borrowers

Legal & General Home Finance CEO Steve Ellis (pictured) said: “We’re delighted to be collaborating with NatWest, who also recognise the positive role lifetime mortgages can play, and we look forward to working closely with the bank to provide another option for these interest-only borrowers.”

He added: “We are committed to raising awareness about the transformative impact housing wealth could have to help these borrowers, enabling them to pay off their mortgage debt and enjoy the retirement they’ve always wanted, while remaining in the home they love.”

NatWest managing director of home buying and ownership Ian McLaughlin said it was an important addition to how the lender was helping customers find a solution to best suit their circumstances.

He added: “We always work hard to support any of our interest-only mortgage customers who are reaching the end of their loan term but don’t have a repayment method in place.”

The product will be available to people aged 55 and over with a minimum property value of £100,000.

It is aimed at supporting consumers who prefer a fixed monthly income to a lump sum, or who have not been able to save as much into their pension as they would have liked.

Like Legal and General’s flexible lifetime mortgage range, interest on the mortgage will roll up over the life of the loan. The loan and interest will be repaid from the sale of their property upon the last surviving borrower’s death or a move into long-term care.

However, with an income lifetime mortgage, the effect of compound interest is reduced as funds are released in monthly amounts, rather than lump sums.

Customers will be offered an interest rate that is fixed for life at the outset, while the monthly income from the mortgage will run for an agreed term of 10,15, 20 or 25 years and cannot be extended.

At the end of the fixed term, the monthly income will stop and interest will continue to roll up until the mortgage is repaid. Consumers can choose to stop this income at any point, but once stopped the income cannot be restarted.

Steve Ellis, CEO at Legal and General Home Finance (pictured), said: “We know how useful that little bit of extra income could be for so many people to keep them doing the things they love.

“Our income solution is a new option for these consumers, giving them the chance to enjoy the benefits of their housing wealth with a fixed interest rate for life, but with the security of a regular monthly income for up to 25 years.

“There is a bright future ahead for retirement lending and we want to see more people benefit from the positive role their homes can play in later life.”