The face of modern living for over-55s has undergone significant changes in the last decade, increasing the need for fresh thinking and product innovation in later life lending to meet the needs of consumers entering and in their later lives.
To better understand how the later life lending market can flourish, Air Group launched the Later Life Lending Census: a comprehensive survey of 400 intermediaries. Throughout Q2 2021, Air Group spoke to financial planners, mortgage advisers, wealth managers and specialist later life lenders with a mission to uncover shifts in consumer attitudes and find out how they have shaped expectations.
What’s driving the need for later life lending?
When asked what their clients’ current needs were, 84% cited paying off an existing mortgage. Almost three-quarters (72%) said their clients were helping their families with financial needs, and 78% required extra finances for ‘essential spending’.
The range of later life options to meet client needs is broadening and there is a wide range of borrowing options available to them including lifetime mortgages with flexible product options, guarantor mortgages, retirement interest only (RIO) mortgages and much more. At the end of 2021 customers had 701 products to choose from just within the equity release market**.
Despite this wide choice, later life lending still has a perceived image problem. From a consumer perspective, 71% of advisers state that their clients view equity release negatively – with six in 10 consumers considering it a ‘last resort’.
So, how can we fix this image problem? Air Group used the findings to build three-point action plan – to rebrand, re-educate and re-engage both lenders and consumers.
Rebrand – moving past misconceptions
First up was the need to rebrand – to change misconceptions and rebrand later life lending. When asked what term they used to describe later life lending, more than four in 10 (41%) used ‘equity release’. Moving onto terms such as ‘later life lending’ (used by 26%) and ‘later life mortgages’ (used by 15%) helps to remove often outdated consumer stigma associated with equity release.
One thing that does unite us, however, is the view that the market is growing with 94% saying that this will serve a ‘genuine customer need’.
Re-educate – improving our understanding
With an ever-growing portfolio of products on offer, it’s natural for some things to get lost in translation for advisers and clients. More than three-quarters (76%) said that consumers didn’t understand later life lending.
More than four in 10 (43%) advisers admitted to having a limited understanding – suggesting a need to innovate, highlighting a key need for investment in CPD and adviser education.
Re-engage – the future of later life lending
While there will be challenges along the way, the future looks positive for later life lending. The final mission – to re-engage with consumers – manifests in a number of touchpoints.
Investing in marketing and training is key. Some respondents said they would refer to specialists due to knowledge gaps. Almost half (44%) expressed a need for specialist knowledge, while 52% would like a marketing campaign to educate customers.
As we emerge from the pandemic, it’s heartening to see positive attitudes for this evolution in lending. With more than 20.5million over-55s in the UK, the market for later life lending is already strong and is set to grow even further. The mission now is to maintain this momentum – shaking the stigma of limited lending options and giving consumers a variety of choices for a prosperous later life.
TRMN has partnered with Air Group with the aim of supporting its members in the later life lending market. TRMN members have exclusive access to the award-winning Air platform, providing fully live rates and API integrations to the biggest lenders in the market through Air Sourcing, plus market-leading accredited training support through Air Academy.
