FSE Glasgow: Interest-only mortgage deadlines leads to more later life lending

Ryan Bembridge

March 14, 2018

A growing interest in the later life lending market is fuelled partly by problems with looming interest-only mortgage deadlines, a debate at the FSE Glasgow revealed.

The panel was chaired by Steve Cox of Hodge Lifetime, and consisted of Gary Webster of Equity Release Supermarket, Stuart Wilson (pictured) of more 2 life, Donna Bathgate of Equity Release Council and Adam Carnall of Age Partnership.

When asked what was driving interest and expansion in this market, panellists said it was a sector that filled gaps in the market– particularly given the wave of interest-only mortgage terms ending.

Gary Webster said: “There have been structural changes in the lending market as a whole and later life lending has seen greater interest from high street lenders as a result – for example, the recent changes in buy-to-let and the slowing of that market has meant lenders are looking to other sectors to make up that loss of business.

“Most consumers end up falling into the later life lending space as a next step when they can’t obtain lending from a high street ender.”

Meanwhile as Adam Carnall pointed out, as a market, it has been created specifically to meet needs that aren’t met elsewhere.

He added: “It doesn’t just automatically begin at 55 because that’s when you can access products – we’re finding that this sector was created to support a market which is under-served by high street lenders.”

Donna Bathgate said that advisers need to introduce the concept of later life lending as early as possible.

She said: “Consumers don’t wake up and suddenly think, I need later life lending. This is a conversation we should be having as early as possible in a client’s journey, and we need to be looking at where housing wealth fits into their overall financial plan.”

Panellists were positive about how the regulator was serving the sector, with Stuart Wilson noting that the market could take encouragement from its increasing willingness to look at later life lending.

He said: “It’s certainly not negative, although there could be more done – we want to see more promotion of the sector as a solution to consumer needs.”

Bathgate praised the continued focus on upskilling advisers and further training in the sector.

She said: “The regulator’s support, alongside the PRA, is moving us in the right direction and towards a more full recognition of how the equity release market works – and that higher risk doesn’t necessarily mean high risk.”

There was a positive outlook for the sector as a whole with Stuart Wilson predicting more growth.

He said:“We looked into lending to those of retirement age, and we estimate the market to be about £65bn at the moment, growing to £142bn in 10 years’ time.

“It’s not just equity release, which makes up about £3bn of that market – it covers a multitude of products and in fact is a more vibrant and progressive market than we previously realised – with plenty of room for growth.”

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