Later life requirements leading to a growing equity release market

"It's a simple fact for many older people that they need more money to cover off greater financial responsibilities, or indeed to cope with some of the ongoing issues that are impacting their lives."

There’s no doubting just how important the political environment is to our sector, and specifically those older consumers who are often impacted deeply by political decision which affect their incomes, and what they have to spend.

A recent look at the post-Autumn Statement analysis of the ‘winners and losers’ from Jeremy Hunt’s announcements seems to suggest that pensioners can count themselves in the winners column.

That’s because the Government continued to keep the ‘triple lock’ when it came to pensions and it was announced the State pension will increase by 8.5% meaning an rise in a full pension from £203.85 a week to £221.20.

It’s impossible not to look at those figures and come to the conclusion that, despite this increase, no pensioner in the UK is getting rich off their State Pension, and with the cost of living increases which – lest we forget – are still ongoing, and might still rise again, you might well argue that such an increase is still less than required.

For those pensioners with savings, rates have of course gone up recently, but many individuals will not have those savings reserves, plus as I write this piece today, the energy cap has just been increased again, and there are all manner of requirements for older people and their families which they may not have needed to even consider a generation ago.

I was asked recently at our monthly ‘Breakfast with Stuart’ meetings about the outlook for the later life lending sector in 2024, and while no-one has a crystal ball, it’s possible to see where such issues mentioned above, might end up creating greater demand, interest and activity from individuals seeking to release cash from their main asset.

It's a simple fact for many older people that they need more money to cover off greater financial responsibilities, or indeed to cope with some of the ongoing issues that are impacting their lives.

Take the NHS, for example. We often talk about individuals using lifetime mortgages or other forms of later life lending to fund long-term care needs, but increasingly we are likely to see people using it to fund short-term care.

One of the Government’s ongoing pledges is to cut NHS Waiting Lists, and you might wish to argue whether it has actually done this. My own experience is currently waiting eight months to get an appointment, and that’s just to see a specialist let alone have anything that might be required after it, while many more people have been waiting for much longer.

In that situation, there are a growing number of people who are not willing to wait and are instead using private healthcare in order to have an operation or to see a specialist, instead of waiting many months, or even years, on the NHS.

Some people will have the cash to do this, others will not, and this latter group are increasingly likely to release equity from their home in order to pay for it.

The Autumn Statement had little in the way of cheer for the broader housing market, and this might ultimately mean more people looking to their parents/grandparents in order to help them onto the ladder.

There was no stamp duty holiday for all first-time buyers, no replacement for the Help to Buy Scheme, and a relatively minor extension of the Government’s Mortgage Guarantee Scheme, which many argue isn’t needed as lenders use their own private alternatives to offer higher LTV mortgages.

With a lack of new support, it’s likely the ‘Bank of Mum & Dad’ is going to be called upon even more to help with deposits, or to act as guarantors, for example, and again older homeowners might seek to use their own homes in order to help their offspring with their housing needs.

Again, it comes back to more people looking at later life lending options because they ‘need’ to, and I think we’re already starting to see this becoming much more evident, particularly in the lifetime mortgage space.

Recent quarterly figures from the Equity Release Council showed the first growth in the market for 12 months, with both the number of new customers and total lending up in Quarter three. We are still some way off the levels we saw back over the last couple of years, but my gut feeling is that we will continue to push upwards in the year ahead, albeit with some political uncertainty to overcome.

Overall, it’s possible to see a growing light at the end of the tunnel, with the caveats that we might not see a huge amount of rate movement, or much higher LTVs offered. However, we are seeing new products, we are seeing renewed lender appetite, positive funding activity, and as mentioned, those demand drivers for people who 'need’ later life lending continue to be cemented in our society.

The need for advice is not going away, and we intend to be there every step of the way to support professionals as they seek to find solutions for many of the issues facing older people in the UK today.