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Why a joined-up approach to later-life lending is vital

Claire Barker - Managing director, Equilaw
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3rd May 2018
Claire Barker Equilaw
"The demand for secure post-retirement funding has experienced a veritable boom in the past two years, more than doubling the market for equity release products in that time"

In June of last year, the Council of Mortgage Lenders called upon the financial sector to develop a more joined-up approach to later-life lending.

It highlighted the increasing ‘division’ of interests and outlook between residential mortgage lenders (who tend to view borrowing as a means of increasing customer equity and as a safeguard against debt in retirement) and the equity release sector (who see later-life borrowing as means to access that equity) and questioned the absence of advice that could cater to those customers “who may need to move between the two markets” or who wish to make better informed financial decisions.

Levels of home ownership amongst the over-55s account for almost 50% of national totals, with comparable levels of accumulated wealth accounting for £6.4 trillion in financial assets and £2.5 trillion in property wealth. However, the impact of dwindling pensions, low interest rates on savings and high levels of inflation have undermined many ‘traditional’ financial options and certainties. As a result, the demand for secure post-retirement funding has experienced a veritable boom in the past two years, more than doubling the market for equity release products in that time (according to the Equity Release Council) and driving up lending in the first quarter of this year by 25% (compared to the same period for 2017). Which is precisely why a joined-up approach across the entire ER sector is so necessary.

The availability of impartial, expert advice is a good place to start of course, but there are other avenues to be explored besides. One area that could undoubtedly benefit from this type of approach, for example, is the methods of communication that exist between lawyers, brokers and lenders. The government has recommended the use of single digital platforms supporting a ‘chain view’ means of communication as part of its recent review of the property market, and this is exactly what the ER sector should be looking to replicate.

Truly responsive channels of communication would help to speed up previously onerous processes, reduce the chances of individuals mistakes or (admittedly unlikely) incidences of fraud as well as to contribute to a greater sense of consumer ‘inclusivity’ and confidence- the yardstick by which any future success must be measured. To this end, a joined-up approach to industry conduct must also be encouraged to ensure that innovation and the drive for growth do not compromise levels of security or support for consumers. Indeed, by ‘future proofing’ products and practices against the vicissitudes of markets, interest rates, inflation and regulatory requirements while also remaining attentive to individual needs and circumstances - in short, by maintaining high industry standards - the equity release sector can maintain its current successful course and look forward to a future of even greater possibilities.

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