The evolution of the later life lending market over the last 10 years has seen the sector move away from traditional equity release products to a broader spectrum of solutions that includes retirement interest only (RIO) and an increasing number of lifetime mortgage options.

These developments have opened up opportunities for advisers to offer a wider range of later life products to their older clients and tap into this potentially lucrative and ever-growing area of the mortgage market.

Older clients are providing greater opportunities

It has also resulted in a blurring of boundaries between traditional mortgage products and the retirement lending landscape, with lenders seeking to evolve product offerings that cater for the growing number of people continuing to work and take out mortgages up to, and beyond the traditional age of retirement.

COMPLEXITY

While this presents advisers with an exciting opportunity to hone their skills, increase their knowledge and explore this lucrative sector, it also brings greater complexity and a larger number of considerations for such customers.

Over the last decade, innovation in the later life lending sector has been significant, with greater product choice and shifting lending criteria broadening the customer remit of later life lending to accommodate the needs of those over the age of 55.

This blurring of boundaries has the potential to draw more mainstream mortgage advisers into the later life lending sector while equity release specialists also need to adapt how they work in order to ensure they adhere to Consumer Duty requirements and fully meet the needs of their customers.

NEED TO ADAPT

As the later life lending sector continues to evolve, it is important advisers adapt to these new realities and stay informed of industry developments if they are to effectively navigate the complexities and opportunities within the sector.

Attending industry events such as our Later Life Lending Network’s Annual Conference on December 5th, and other training sessions dedicated to later life lending, can help them to remain informed and keep pace with market developments.

Expanded product choices, innovative features, and changes to lending criteria have reshaped the later life lending landscape over the last few years, a trend that is likely to continue over the next decade.

Changes are often brought about by adviser feedback

New products such as hybrid products, which allow homeowners aged over 55 to borrow money against their home while paying interest on the loan, and those with no early repayment charges (ERC) are also growing in popularity, presenting an alternative to traditional equity release for later life borrowers.

This is marking a seismic shift away from the traditional, many products of which often come with ERCs of 10-15 years or more. However, changes are starting to occur here too with some providers in the equity release space recently moving to reduce the early repayment charges on their products in response to adviser feedback. We now have ERCs of four years and even zero.

MORE REGULAR RENEWALS?

For advisers working in the later life mortgage market, these changes open up the possibility of renewing cases much more regularly and present the chance to earn greater levels of proc fee income by reassessing the needs of these customers frequently.

Further opportunities are also likely to emerge following the recent Budget, which saw a reduction in the benefits received by many older people, as well as a greater taxation burden.

The likely impact of this is a possible uptick in the number of homeowners looking to utilise the equity in their home to make up for poor pension provision and ease financial responsibilities.

Ongoing pressures in the economy and elevated house prices are likely to drive up demand even further as more people continue to seek borrowing into retirement solutions and tap into the equity in order to help family members get on to the property ladder.

Understanding the different products on offer and keeping up with the legislative and industry changes within the later life lending market means advisers can help their older clients make an effective and informed decision about their borrowing requirements.

Tapping in to the educational and other resources available in the sector and having access to a network that offers these products via a range of providers can provide advisers with the peace of mind that they are working in the best interests of their clients.

Victoria Clark is head of the Later Life Lending Network, part of The Right Mortgage