Master Later Life Lending - By Air
The "Master Later Life Lending" podcast is designed specifically for equity release specialists and mainstream mortgage advisors who serve clients over the age of 50. Hosted by industry veteran Paul Glynn, our mission is to equip you with the knowledge and tools needed to excel in the dynamic world of later life lending.
Each episode features in-depth discussions with leading experts, focusing on the unique financial needs of older borrowers. We tackle key issues such as dispelling myths around equity release, exploring the latest product innovations, and understanding the regulatory changes that impact your practice.
Our goal is to empower you to provide the best advice and solutions to your clients, whether they are traditional equity release customers or emerging younger later life borrowers. By staying ahead of market trends and enhancing your expertise, you can build trust with your clients and grow your advisory practice.
Join us on this journey to mastering later life lending, and ensure you’re equipped to meet the evolving needs of your clients. Subscribe now to stay informed, inspired, and ahead in this crucial segment of financial services.
Master Later Life Lending - By Air
Breaking Barriers: How Lenders and Advisers Can Shape the Future of Borrowing in Retirement
In this episode of Master Later Life Lending, host Will Hale sits down with Paul Broadhead and Charles Roe from UK Finance, and Victoria Clark from TRMN to tackle one of the biggest questions in the evolving mortgage landscape: How can lenders and advisers collaborate to better serve older borrowers?
Together, they explore the need for a more integrated approach across the mortgage journey, breaking down barriers between mainstream and retirement-focused advice. From building stronger adviser support to creating more flexible, consumer-driven products, this discussion highlights the vital role of innovation, communication, and shared responsibility.
Whether you're a lender, adviser, or part of a support network, this episode offers practical insights on how to meet the shifting financial needs of aging clients and deliver real value in a changing world.
Welcome to Master Later Life Lending, the podcast where we explore the latest trends, challenges and opportunities in the later life lending market. I'm your host, will, and whether you're an equity release specialist or a mainstream mortgage advisor, this show is designed to help you stay ahead of the curve as you navigate the unique needs of older clients. In this episode, we're asking the question how can lenders and advisors collaborate to evolve the later life lending market? We sit down with industry experts Paul Broadhead from the BSA, charles Rowe from UK Finance and Victoria Clark from TRMN to discuss the future of the later life lending market. We explore what lenders should be doing to support advisors in this growing sector and what innovations are needed to better serve older borrowers. The conversation highlights the importance of collaboration between lenders, advisor networks and clubs to develop products that meet the evolving needs of retirees and older borrowers.
Speaker 1:As we move beyond seeing mainstream and later life lending as separate markets, we consider how a unified approach can address the diverse borrowing needs of customers throughout the different life stages. So let's get started. So let's get started. So let's get straight into it. So first question, I'm going to come to you, victoria. So what barriers do you currently see preventing a more integrated approach to mortgage advice across different life stages, and what would you suggest that lenders, advisors, regulators or policy makers more broadly can do to break down some of those barriers?
Speaker 2:Yes, thank you for the question, will. It is something that as a network we strongly really care about. I think for a long time our industry has been very separate to the whole of lending and ultimately it's just specialist lending. It's just a different type of customer that every single one of our advisors come across all the time. But if we keep seeing it as separate things, how are we able to actually offer them all of the solutions available? So it's something that we've done as a network.
Speaker 2:Say myself personally, I was a part of the extra release department, with people within the extra release department, and we've now introduced that to being the whole of lending. So I think the more that everybody can do to kind of apply that same approach and treat the extra release is a form of lending and that all of the support that goes into it should be looking into that. Yes, I know it's a different process and that's still very much the same as it is for other things, but it's just the same as another product. So I think if people just break it down and apply the same thing, that, like we all know, it's just a mortgage but for life, it hopefully should open up people's minds a bit to that and obviously with the introduction from air, having the comprehensive conversations and what you guys bring to that and helping advisors really put into calculators to know that there are more options available. Rather than one looking down one way and one looking down another way, we should all be looking at it as a whole holistic approach.
Speaker 1:That's really interesting, victoria, to hear how you're addressing that challenge. I think perhaps, sort of moving on to Paul, would you sort of see the same picture as Victoria outlined in terms of sort of, I suppose, suppose equity release just being another mortgage and therefore fitting within a broader sort of more holistic advice process?
Speaker 3:I think, yeah, I think I would. I mean, we've seen historically, haven't we? The advice process has been pretty compartmentalized, with mortgage advisors, financial advisors and equity release advisors looking at different aspects of the market. To a borrower they need access to finance using their property wealth, so actually it isn't more complicated than that for them. So it's incumbent on the industry to make that transaction, to make obtaining that advice, as simple as possible. We know that trade bodies themselves have got a key role to play here and it's important that we continue to collaborate, and we've had a number of conversations already with ourselves, with UK Finance, with the Equity Release Council, about trying to develop a type of blueprint for lending in later life, because it's really, really important, isn't it, that you know, irrespective of where the customer comes into the process, that, irrespective of where the customer comes into the process, that they can simply navigate to get to the right advice and therefore the right financial solution for them.
Speaker 3:The fact that we have slightly different regulatory environments is a challenge for the industry, but that shouldn't be the challenge for the consumer.
Speaker 3:I think, from a lending perspective, we just need to get a little bit better at, first of all, making sure that we've got innovative products that are serving the changing needs of society.
Speaker 3:I mean, retirement now versus 15 years ago is one at a very different time and two for many people it is a process, not a point in time, so there are different considerations and needs.
Speaker 3:And also to fully understand why people want to borrow later in life, because often we think about it's about helping first-time buyers or it's about supplementing pension income, but it's a whole range of things and each of those needs different solutions. So we've seen a lot of innovation in the building society sector, of course, which is helping parents, help their children or grandchildren get onto the housing ladder, utilising that potential inheritance when they need it most. And the final point is regulators and the government has got a key role to play here, because what we don't need is regulation that's gone far too far, that's blocking people out from home ownership, because the worst outcome for all then is that they end up having to, you know, borrow from other sources or from family and friends in retirement to be paying rent that they don't have. So we need to have a look at the long-term impact on society.
Speaker 2:I think just with that, Paul as well, I think there's a lot of people who are entering into the housing market at age 30 with a 40-year term, all straight away, are a lifetime customer. So you've got to look at the whole journey. I think a lot of people can stay in their five-year fix and not see beyond that.
Speaker 1:And I say, charles, uk finance, you have lenders spanning the whole spectrum, don't you? Of the mortgage space. So you've got lifetime mortgage lenders and more traditional lenders lending to older customers. So do you see that sort of similar picture as Paul outlined?
Speaker 4:Very much so, very much so and I think consumer duty will go some way to that to make sure that those customers get the good outcomes and the right outcomes for their individual circumstances of lending into old age and borrowing in old age which can be into retirement, which is available and are available for them.
Speaker 4:And it's where they get that independent advice that they can trust as well. And I think it's what Paul and Victoria were both saying in relation to those homeowners that are taking a mortgage when they're in their early 30s, mid 30s, maybe for 40 years. They will just have finished paying off that mortgage off by the time they're in their early 70s and then they might be looking about how they're going to use the equity they built up in that property to help fund them in their retirement. So there is that education piece there as well. So there is that education piece there as well. But linked to that, I think there is a psychological piece that those that have worked hard all their life to pay off their mortgage are reluctant to leverage their property wealth when they reach later life to be able to either enjoy the benefits and the spoils of their hard work over the previous 30, 35 years, or in terms of sharing some of their property wealth with their children or with other parts of their family, if they wish to.
Speaker 1:Yeah, it's interesting, isn't it? I don't know I was going to come to Victoria. Actually, I suppose it's something that has been a barrier for some time in that customers it's something that has been a barrier for some time in that customers many older customers sort of do see taking out later life lending products almost as a bit of a failure that they've expected to sort of pay off their mortgage and then be able to live comfortably on their retirement income without having to take on further debt. But we certainly see, I think, some changing attitudes in that area. Victoria, are you seeing attitudes change?
Speaker 2:Oh, massively. So. I think even in the time you know which I've been around in X release and then now with mortgages, it is a mortgage. So you know, if you want to live your life and what you've been saving up today isn't going to pay for your retirement in the future, it's just going to be a completely different level of income that you're going to need to actually be able to enjoy yourself. So I think more people just see it as a mortgage and that having a loan against your house is just normal, which is better than people thinking that renting is normal. I think at least so, with the more we can help people that at least they own their home. But you know, even my mother-in-law first thought that I stopped, like was supported stealing from that grannies, and now it's a completely different headspace that people are in for you know, it's just something to help you, it's something to help your retirement.
Speaker 2:I think kids are more, as I say, kids. You know the succession planning that there is, for beneficiaries are earning more money now than their parents or grandparents would of anyway. So they would much rather that their family get the um, that they'll be able to enjoy it as they get older, rather than the people who are in their 30s, 40s, 50s, you know, actually being a part of the rising income and getting the benefit of that. Those older just haven't been able to. So I do think it's becoming a lot more normal like even for us, making it a normal part of our network process of looking at it across the board. Any new trainees we bring into the market now as well for just mortgages, we ensure they look at later life as well. Whether they're authorized in it or not is a different conversation, but being aware is very important, I think, from day one from any new advisor that we bring into the industry.
Speaker 1:I think part of that normalization think needs to happen across all parts of the market, doesn't it? I think, even if you sort of go back to MMR and the sort of expectation probably from the regulator that you know the objective was for people to sort of clear their mortgage before moving sort of into retirement, the reality from the stats that you know we've talked about today is just that for many customers that's not a realistic objective to have. So and we've seen you know many of your members develop products that sort of extend into later life and offer people, you know, genuine choice. So that's got to be something that we try and promote, surely?
Speaker 3:Yeah, I think you're right. I mean, if you think you know the mortgage market review in 2014,. Look how much society has moved on just in that intervening time and there's a big question mark about whether that remains fit for purpose 11 years hence. And, of course, we've got a review from the FCA this year, which I think is welcome. But I think yeah, I mean, normalising that conversation is really, really important.
Speaker 3:Um, there is still, I think, uh, an element of hangover, coming back to what victoria said there about stealing from from granite and the old shared appreciation more these days, the horror stories that were around then, and I think the work that um, that ship did, and then the equity release council subsequently on standards, has really, really helped, uh, improve the standing of the industry but also the reputation.
Speaker 3:But to Charles's point, education is absolutely vital. You know we've got a money and pension service that talks about money and pensions but not property wealth, and for many people the property wealth absolutely dwarfs any pension provision that they're going to be entering retirement with. And you know, we know, that those are fortunate enough to have uh parents that you know might leave an inheritance and the parents perspective. Now we're living in a, in a. You know we're getting older as a society. That's something that we should celebrate, not fear. But the impact of that is that for those lucky enough to have an inheritance coming their way often that that inheritance doesn't now come until they're in the 60s and actually if they can't get a deposit to purchase their own home, it's far better to have that conversation as a family, get the advice in the industry and actually have that inheritance when it's needed most, because I think everybody and society itself will benefit from that. So we do need to normalise the conversation, you know. We just need to be a little bit honest about some of the challenges that we're facing and not every generation has faced the same challenge.
Speaker 4:Yeah, I would agree with that, paul, and it's also in terms of the innovation that needs to take place in the sector, and we saw that the fca only this week came out and said that it's going to, you know, going to support more innovation, um, in financial services.
Speaker 4:I'm sure that the mortgage market is, you know, ripe to do some innovation in this space and look at how perhaps more mainstream mortgage product could actually move into perhaps a Rio product and then into an equity release product over the life stages of a borrower, so that it gives you that flexibility and that when you're getting that advice in your early 30s or early 40s in relation to the mortgage and how it could work, intermediaries and product providers are looking at how that hybrid policy could be developed or that hybrid product could be developed to help everybody and also to start having those conversations much earlier in life. So it becomes more apparent this is what I want to do. This is part of, as Paul said, this is part of my retirement planning, as well as being able to pay off my mortgage, because over the years, we've seen that some house prices have generally grown significantly over a longer period of time and they can be looked at in terms of like an annuity when you're drawing your pension to supplement or augment your pension income.
Speaker 2:I think as well with you looking at the high net worth customers as well, on the kind of the other end of the spectrum of what we've just been discussing, the high net worth customers are a massive part of lifetime mortgages. They're just thinking smart about it. So I think it is just really dilute. It's probably on the mindset of the advisor than it is the customer of thinking whether these options are the right things available for them. And that's probably another big part of overcoming that of letting them know like you've got massive opportunities with people who really know what to do with their money and they've had, you know, recommendations from their pensions investments advisors who have told them to do with their money, and they've had recommendations from their pensions and investments advisors who have told them to do this. If you're not the one in the know of how to do it, they're only going to go on elsewhere to help to get it from someone else.
Speaker 1:It's Victoria. It's a really interesting point, isn't it? I think sometimes we pigeonhole the sort of customers that we see in this market and actually the reality is these days that they span the whole spectrum of sort of wealth profiles. We see some mass affluent, high net worth customers, but we also see perhaps the more traditional sort of asset rich cash, poor people who need to use this to support a different set of needs. So it's very dangerous, I think, to put customers into pigeonholes, because actually these products are relevant for a very wide range of customers.
Speaker 1:But I'd like to come back to a couple of points that both Charles and Paul touched on and Victoria get your views, I suppose, on two areas. One is how, as an industry, we can raise customer awareness of the options that are available, and then two, this point around sort of training and educating advisors. I think you yourself sort of there's still a bit of a lottery, I think, in terms of, as a customer coming into this market, the outcomes you get can vary very much according to the type of advisor that you find yourself sitting in front of initially. So how do we sort of get rid of that lottery and make sure we get more consistent outcomes for customers?
Speaker 2:We're a part of a network so I can wave the flag across all of that. But it is those people who are amongst the industry who are pigeonholing themselves and they don't have anyone else to lean to against that. So the only people who can make an impact to those people who are limiting their customers is essentially massive players in the market, such as yourselves were there, so it's like helping them get that. I know you're already doing, but you know, like we've already touched on as well, the extra release council is the extra release council. It's not the later life council. It's. How does then an advisor who maybe doesn't have the support of leaning to, like a network who's developing all the time and moving forward, or even a large firm who would they go to to say, well, I need to expand my knowledge on this area? And then people like, well, our box is here, so you could try this box it's. We need to be doing more collaboratively across the whole industry to be able to share that with us. As a, we're trying to get more into the DA space just to help the industry rather than it even being to join the network. It's just open your mind. Look at the affordability of a customer. Don't do that to yourself, because I think these firms aren't opening up their minds to it. It's only going to damage the rest of the industry that are actually moving with the times and trying their best and all these different things we're saying.
Speaker 2:With the FCA we're still getting such a close look at extra release. But if we keep normalizing it across the board and everybody works together on that, I think that's how we'll be able to be able to overcome it. So I'd probably say that the stronger challenges in training is those that are the most well established, that know that they're doing the same thing for 25 years like we're doing. Fine, we're successful. You know that's it. It's they've got to kind of open their minds up to it. But whereas we're seeing that the new people you come into the industry, or even newer firms or people who are just open-minded, are the ones who are continuing to grow, look at the options. So I think the more we can do together to kind of just make it known that if you're not doing that, you're behind, you're not. You know it's not everybody else is wrong, it's you're the one who needs to be getting forward with that. Looking at bank statements is important. If you don't think it's relevant for an extra release customer, then I don't actually want to talk to you.
Speaker 4:I would say I think that's a good point, victoria, and it's also in terms of, with an aging demographic, in terms of population, um, there's going to be a greater need, um, my belief is going to be greater need for homeowners to access the equity in their property, particularly if they're reluctant to downsize.
Speaker 4:Um, and you know, it's how they, how we make this more normal, um, from the point of view of being able to, uh, perhaps have those, you know, dinner party discussions or those discussions in the pub on a sunday with your mates.
Speaker 4:And then this is what we're thinking you're doing, um, and the fca I think it picks up on this as well, because their dear ceo letter to the mortgage intermediary sector earlier on this year. One of the things they talk about there is making sure that your customer is able to make that informed decision by considering all options that are available to them without any bias. And I think we've got a real opportunity with the broker community to work with them, to educate them. In terms of changing demographic, how can we help people in terms of enjoy the retirement they're entitled to, whilst, as you said, victoria, enable them to do perhaps a little bit of tax planning as well, so that they're looking at things in a tax efficient way, whether it's inheritance tax or in terms of using up the allowances to gift money to friends and family during your lifetime.
Speaker 2:Yeah, and I think the more brokers know, even from a first-time buyer point of view, if the family's already on board. Like you say, it's a conversation around the dinner table, isn't it? Like well, did you know about this? Because this is something that could help me as getting a deposit, it could help you with living life in your retirement. So I think limiting who you tell the message to is also limiting it overall. I think everybody should get to know and that's why everybody should understand all product offerings. But again, I'm not putting down specialists, because you can be a specialist in bridging, you could be a specialist in second charges, you're a specialist in equity release Right, completely fine. But everybody needs to know across the board. The tools are able to tell their customers about them and it's the customers who will bring in the business overall.
Speaker 3:I think that's the key, that's the absolute key point that Charles mentioned the FCA. We had Emily Shepard from the FCA speaking at the BSA conference last year and she stated quite clearly that from the FCA perspective perspective, they see lending into and in retirement moving already from a niche to a norm. Now, if that moves from a niche to a norm, that means we need to normalize the conversation with the customer. When the sack off from the desk it might need some element of signposting, but everybody can be specialist in absolutely everything, but we need to normalize that conversation.
Speaker 3:The other area I think is really really important for lenders and intermediaries to get together, given the percentage of mortgages that come through the intermediary market is they've got an absolutely key role to play in educating the other way. So educating lenders into what gaps they're seeing in the market, what customers' evolving needs are and where innovation needs to focus. Next, because you're right, you can't be a specialist in all products and if we get this right we'll have a later life lending community that has a whole host of products for very different circumstances and our job really is to navigate the customer to that right solution for them, whatever their circumstances are. So I think let's start thinking about this is going to become a normal part of Morgie's lending, and the more we think about that then the better the solution is going to be called.
Speaker 1:And Paul, just building on that, you talked about some of the sort of positive music coming out of the FCA and I think that was built on, you know, in the last sort of week, 10 days, with Nichol's speech at the JP Morgan Symposium as well, where he made some very positive, I think, references to the opportunities around later life lending.
Speaker 1:But as we sort of move through the summer and through the sort of consultation around the sort of mortgage market more broadly, what would you like to see from the FCA? I mean, at the moment, mortgages and later life lending by implication is outside of the scope of the advice guidance boundary review. Is that something that we should question whether it should be included within that? We currently have a rule book that is sort of makes a clear distinction between equity release and mainstream mortgages, let alone the difference between COB and MCOB in terms of the separation between mortgages and broader sort of investment and pensions advice. So those are just a few areas, but what would you pragmatically like to see come out of the review that we're going to engage with sort of in the summer?
Speaker 3:I think, from my perspective, what I'd like to see is a really wide ranging conversation, so I don't want to see the FCA like to see is a really wide-ranging conversation, so I don't want to see the FCA coming to the table with any preconceived ideas about areas of the rulebook that might need tweaking or areas of the advice process that might need tweaking. What gave me some encouragement from what Nicol said last week was, if we continue to treat pensions, mortgages and savings as separate tracks, we're going to miss the opportunity to get consumers where they need to be, and that's at the crux of this. We need to get consumers to where they need to be, so therefore, all of this is financed to them. So we need to simplify the conversation. We need to ensure that consumer protection is absolutely at the heart of it.
Speaker 3:But I don't think we need what we've got now and Charles mentioned consumer duty earlier on. If you've got consumer duty, which is focused on outcome the consumer outcome we do not need a completely detailed rule book that tells every single lender the route map to go exactly the same way to that outcome. So we need to make sure that our rules that give clarity to mortgage lenders and instill that consumer protection. But we need to have flexibility because of the way that society is changing, the way people's needs are changing and the way people's you know working lives are going to change. We're going to have, in you know, the not too uh far future. People are going to be working for a lot, lot longer and perhaps go through two, three, three, maybe even four different career changes. Either way, we need a financial services sector that's fit for purpose to respond to that.
Speaker 1:Yeah, and Charles, your views on that.
Speaker 4:Yeah, paul made some really valid points there and I think, in terms of what I'd like to see from the FCA and picking up on Victoria's point as well is that you have people that specialize in bridging.
Speaker 4:You have brokers that specialize in um buy to let.
Speaker 4:I'm not advocating that what you do is you have um a broker that can be all um you know all people to all um, to all borrowers, but what they need to do is they need to be able to hand over if they, if it's not in their area of expertise or where they feel comfortable to have that warm relationship with another specialist or a specialist that they can say look, I can't help you with this later life borrowing that you're looking at, but I'd like to pass you on to my friend Jimmy or Jemima.
Speaker 4:They will be able to help you because they specialize in that there's something that's coming back and actually it's not that specialist piece in terms of later life. They can pass it back to a mainstream broker and I think that's the way that it needs to work in terms of being able to pass off to the specialists, because otherwise you end up being so broad in terms of having to understand what's going on, it makes it much harder for the broker to be able to meet their obligations and the requirements of consumer duty in terms of that good consumer outcome and selling the product that's right and identifying and selling a product that's right for their needs.
Speaker 1:And Victoria. I mean you pointed to sort of sections of the market where things do work better, maybe second charge or bridging etc. What do you think we need as an industry to industrialise some of those referral mechanisms to make sure that they can work properly at scale?
Speaker 2:I'd say that it is just really with getting it to become more at the forefront. I think, even with what you just touched on when you initially asked the question, the SCA are telling us to do it. It telling us to look at mortgages from an extra release point of view whilst also seeing the process is very different themselves. So how do they expect to not give us any support in helping advisors navigate that when actually can't really get their heads around it themselves and making sure that that all that lines completely blur? So I think just getting it to being a another type of specialist lending that everybody just considers as part of it, it's just a bit we've all got to just keep working on, keep getting it in front of everybody.
Speaker 2:I think there are some lenders as well out there who are already I'm not gonna name those. Uh, we're already doing quite a lot where the customer comes to them if they've been given to them and then you know they're rejected straight away. They're saying you know it's not right for an extra lease right now, but actually you could go on to this other type of plan that would support you for the next 10 years, say, and then we'll get to that, I think if more lenders had that knowledge themselves as well, it could really help with any rejections. If, say, somebody says, oh, I can't help you because of xyz. But if a lender rejected it, they could say we are rejecting you for this reason, but you could go here I know there's a lot of advisors and advisors. They're the ones that are actually going to be doing it.
Speaker 2:But if the lenders can be doing more to also kind of help signpost to say you know, there's other options available for this customer, and the more lenders I think that are also in the space of the whole of later life, I think that will really help as well. So I think it just helps people like you completely. That advisor who may not have even considered extra lease has been told by the lender and they're like, okay, I didn't really understand that because I'm not educated in it. They wouldn't say that, but that's the case. But then they could actually start to open their eyes a bit more to it. So I think there's ways we could all work a bit more collaboratively together to help the training need, if it's something we want to excel in.
Speaker 1:And perhaps we've concentrated on the FCA, but maybe a question aimed more at sort of Paul and Charles when looking at the other side of the regulatory landscape. So, looking at the PRA, what would be the asks of the PRA to create an environment which is maybe more conducive to product innovation in this space? You know I hear a lot from lenders around restrictions caused by Solvency 2 or around LTI rules, et cetera, which maybe prevent some innovation in this space. Have you got a view around what you would want from PRA rules to really help support growth in this space?
Speaker 4:I think, in terms of the PRA rules, what we would ask for is there's a recognition from the PRA that, in order to have innovation in the market and also to meet the needs of not just first-time buyers or those that are looking to move up the property ladder, but also those that are looking to downsize, what can they do in terms of the PRA?
Speaker 4:What can they do to help that product innovation that's needed, but also to recognize and truly understand the risks in the market for the products that are being developed for that later life piece and we've already heard Nikhil come out and say recently in terms of look, we're happy to take a little bit more risk in terms of the regulator, the FCA, of the regulator, the FCA, but if there is risk increase, there is an increase in perhaps, for example, the number of people that get into arrears or properties that's maybe repossessed, then that will be one of the downsides of having more innovation in the market and there needs to be a recognition of that and I think that most lenders would be very welcome to the opportunity to innovate where they can.
Speaker 4:But it goes back to something that Paul said earlier, which is that the BDMs also have a role to play, to go back and feed back to the lenders, to say, actually, this is something that we're hearing from speaking to the advisors, this is a product that they really like, or this product that ABC has got out doesn't work as well as it could do because of these restrictions. Why can't we look at something and develop something that's better than that or that builds on it, to provide the support for that part of the market? And it might not be the mainstream lenders, it might be some of the more specialist, perhaps non-bank lenders that are getting into this space as well, which would be great, because there's enough for everybody to go around and paul on your side, any sort of views on that?
Speaker 3:yeah, I think, I think I'd agree completely with what charles has just just said there.
Speaker 3:I mean, the lti limit is the one for me at the moment with the financial policy uh committee.
Speaker 3:Um, we need, we need the review of that. That needs to to be increased because there are people being locked out of the market because lenders are coming up against capacity in terms of that and actually if that continues, then we're going to have people that, on every other metric, can afford a mortgage but can't get one because capacity is constrained and the way house prices are continuing to outstrip earnings growth. That isn't going to go away soon, notwithstanding the commitment from this government to build a million and a half homes during the course of this parliament. You know we need to make sure that this market works for consumers through the cycle and if we need a period of flexibility in regulation while supply catches up, then we need to be honest enough to have that conversation and I'm hoping that with the government growth agenda, the regulators being open to discussions, we can have a really meaningful, candid conversation over the summer that will start leading us to better outcomes and just on that paul, in terms of those better outcomes.
Speaker 4:And then we talked about the one and a half million homes that the government want to see built over the life of this government. But the challenge that we have there is that it's not just building homes for first-time buyers or those people that want to, you know, move up the housing ladder, but also to build properties that people that may want to downsize from their property want to move into. And when I say that, you know research that some we did in terms of report that we published last year homes we need. One of the things that we found when speaking to people that were looking to downsize is that they wanted properties that were fit for purpose, as in, bigger than living in a retirement flat, that they had the opportunity to have open space near them and that they could invite their friends around to entertain and the family around if they wanted to.
Speaker 4:And at the moment I think most new home builders are focused on building the properties for first-time buyers or second third-steppers, rather than that retirement market. And that retirement market is going to get or downsizing market, I should say is only going to get bigger over the course of the next few years as people look to release the equity in their properties, and it may be that not everybody wants to do it through equity release. It could be by through downsizing, um and again, in our report there was 65 percent of homes owned or occupied by those over 65 years of age had two or more spare bedrooms and um, which is a significant number of um, you know larger properties that could be sold and upgraded to make them more energy efficient and also help to stimulate the housing market.
Speaker 1:I think that's a very good point, charles.
Speaker 1:I think there's still some sort of anomalies in the market as well, even where there are sort of age restricted properties available which would be suitable for people, securing mortgages on those, certainly from a lifetime mortgage perspective, can be challenging, and that has to be one area.
Speaker 1:Properties available which would be suitable for people, securing mortgages on those, certainly from a lifetime mortgage perspective, can be challenging, and that has to be one area that the market looks to develop, I think. But, victoria, from a product development perspective and an innovation perspective, is there anything you would call out in terms of us to lenders? The sort of things that AIR members are always raising with us is the restrictions from an LTV perspective, so not being able to meet the needs of customers coming in with higher LTV lending requirements, some of the property criteria, restrictions that we see on lenders products, and then maybe the lack of a regular income product is something else that gets called out. Those are just a few, but from what you're seeing and what your advisors tell you, where do you think the gaps in the market are currently?
Speaker 2:Well, you know, I think that is just part of it. I think you know, we know there are some people who don't have the income and that's where we look at options like this. There are options across the whole of the industry where there's no max age of who you could be, so there is a mortgage available. It's those who they can't afford it, and that's the thing. And then they don't have the loan to value to be able to support them. They don't want to downsize, so it just it would be good to go back to where we could maybe start to see a bit, because we've become very conservative, I think with the loan to values, that's a big one, I think, for advisors.
Speaker 2:I know making payments as well has obviously made the rate better, but it's done nothing more for being able to have more of a loan size, which is what people then keep asking for. So if I could demonstrate I can even make a payment with the little money I do have, it's still not going to give me more of a loan to value. That's probably a gap that hasn't been looked at. With having these payment plans in place, they are very good because they you know, some of them are really flown off the shelves with us. So it means that there are people who can do it. But it'd be really good to say like, if you can give this much, we can like we could improve your loan to value by that much. That would be something that I think overall would be would really make a big difference to help those who are kind of that in between time of really looking to stretch the loans of value if they can do.
Speaker 2:But I think the other thing just kind of with this, which isn't so much, say, with the product development, it's how long it takes to know that it's a no, like what?
Speaker 2:That's such a waste of time for everybody. So the more that could be done to improve the fact that you know I've waited six weeks to start getting my head around that I might be able to have this dream next few years that I've been thinking of, and then you're told no, because of something that you could have known from day one, that that's something that's not really good for the consumer. They could have gone elsewhere on day two. That would have then meant that the process had already begun for them. So I think product development is happening in lifetime mortgages and I think it's been really good the last couple of years as well. I know obviously certain lenders are really moving quickly with getting this happening, but until those things get sorted like knowing that whether it's the right option or not from very early on in the process I think that's another thing that needs to be looked at as well as that.
Speaker 1:So that perhaps brings me on to a sort of final question, and it sort of might be absolutely in your sweet spot sort of Charles and Paul, because I think Victoria brings in an interesting Charles definitely got excited about that Very passionate.
Speaker 1:But I think it sort of runs across both the sort of later life market and the mainstream market, but we still, as an industry, seem to be running fairly archaic processes in terms of helping people sort of get loans. So where do you think the opportunity is for the implementation of technology and the implementation of more sort of simplified journeys in order to reduce the cost, to serve and ultimately put value back in the hands of customers?
Speaker 4:Yeah, there's two bits, I think. First of all, there's the digitization of actually home buying and selling to make that easier and we're seeing some innovation there in terms of people like Coadjute and in terms of PEXA, but we need to bring on board the conveyancing community land registry. We need to bring on board the conveyancing community land registry, and one of the things that UK Finance and BSA have been calling on for a while is that we need government to set the standard in terms of what this will look like in terms of the digitalization. Where does that start? Should it start from land registry or does it start further back in the chain, for in terms of the estate agency, when that property first goes onto the market, and whether we put it develop the digital property certificate which has been talked about for a while, which has everything about that property in a single place?
Speaker 4:Secondly, I think it is then in terms of the home buying and selling journey for the consumer.
Speaker 4:Again, we did some work about three years ago on this and the typical consumer, from the moment they walk into their estate agent to say I'm interested in buying this property or looking at this property, to the time they actually get the mortgage and move into that home, they've probably shown their ID on eight or nine separate occasions.
Speaker 4:So, whether that's to the estate, estate agent, whether it is to the insurance broker or their mortgage broker, to their solicitor, to their bank, um, it just racks up, um and again. We think that. So there's an opportunity there in terms of open banking, to be able to do digital id and then for the broker, um, to be able to get access to the banking facilities of that individual to be able to assess their income and affordability, rather than the homeowner or the potential homeowner having to fill out copious pages of income and expenditure forms and trawl through all of the data themselves. So I think those are the two areas that we would love to see some innovation there. We are involved in the Home Buying and Selling group, and the BSA, I'm sure, are involved in that as well, and also the digital home buying and selling process as well. But I think we're starting to see some innovation, but there's still some way to go.
Speaker 1:And Paul. Finally, on your side, do you see things like open banking being able to make a big difference in this space?
Speaker 3:Yeah, I think open banking and technology will make a huge difference. I mean, we meet quarterly with all our members at chief executive level. I tell you, virtually every single one of them is going through some sort of technology transformation at the moment. It's huge. So that is clearly going to help. And that technology transformation isn't just about internal processing systems. This is the ability to plug and play with other opportunities to make doing business with the organization much, much simpler.
Speaker 3:What that does does give us the opportunity for in the future is more partnerships and more partnerships. Technology eases that partnership journey because in turn, it simplifies the consumer journey to get through those range of providers, and that is going to give us the opportunity to bring us closer together and reduce some of this silo, segmentation, compartmentalization. But above that, we can't do technology can't do all of that, because technology is driven by people. Environmentalization, um. But above that, we can't leave. Technology can't do all of that because technology is driven by people, um. So therefore, we still need us as an industry and the respective trade bodies to work together to make sure that we capitalize on the opportunity that technology provides us.
Speaker 1:That's super so so we've covered a lot of ground in this podcast, but I'm going to give you each sort of one more opportunity for for sort of final closing remark, and I'd like to sort of understand that, for each of you looking out to the end of 2025, in the context of driving safe growth in the later life lending market, what would be your one hope or one ask of the later life lending community in order to get us to where we should be in terms of the opportunities in this market?
Speaker 2:So, victoria, starting with you, I would say my big ask of things is, I think if you are an independent in this industry in the later life space particularly, my ask is to make sure that you are really looking to keep growing and moving with the times, yourselves, doing that kind of development, really work. Lean on the support that there is available in the industry. Don't limit yourselves. Think about the income and expenditure affordability, assessing people's proper vulnerabilities that there are in there as well with that, and just really keep your options open, for if you're not able to demonstrate where you've been able to refer a mortgage with any of your customers, you're not doing a good job. I'm afraid, and it's just.
Speaker 2:I think it it's okay to be in a place where you can run your business yourself. I think it's just getting out there and leaning on who is around to be able to help develop and broaden your knowledge and get to make sure that your customer is getting the best outcome all the time and that you're really looking into all the options that there are available, and I think then working with more mortgage brokers because of that will ultimately make mortgage brokers more aware as well. So I think there are other places where people hear it all the time because they're a part of like ourselves, like a wider network where we've got all product areas. But if you're out there doing what you think is a good job, it'd be good to kind of broaden your minds out and then I think as well from say, like the council and amy as well. So actually, council and amy looking to work together would be another ask of mine, please. That would be really helpful for the overall and development across the board.
Speaker 1:So yeah, that's my Well, we can certainly agree with that, I think. Victoria Charles, over to you for a final closing remark.
Speaker 4:Yeah, the FCA's review that it's doing of the mortgage market. I think that's a great opportunity for all parts of the mortgage sector, whether it's advisors, whether it is extra relief, buy to let, to work together, to work with the FCA to try and encourage true and foster true collaboration between lenders, advisor networks, trade associations and innovation to cater for the needs not just for the later life lender market but, as I said earlier, in terms of that holistic end-to-end from the first time you take a mortgage with a view to what the benefits could be when you look to downsize or retire.
Speaker 1:Thanks, Charles, and finally Paul.
Speaker 3:From my perspective, I think you know I'm a firm believer that the right information at the right time to the right person is absolutely key to all of this, and I think there's a lot of complexity here and a lot of that scares borrowers for mentoring the process and actually getting the right solution. So I think upfront, I think government and regulators have got a role to play here, and that comes back to when somebody starts seeking guidance about what they can do to support their either income or give them opportunities in later life. The whole package is there for them. So that's including property, wealth and pension and money guidance as well, so they can make an informed choice. There's far too many people sat in this country in cold, jacky homes with 300 000 pounds of equity in there because they don't know where to start well, that's a good point to end, I think.
Speaker 1:I think you know more. More holistic perspectives across the market and greater collaboration by all stakeholders can get us all to a better place. So, no, what a good way to end. So, thank you, really appreciate you taking the time today to have this comprehensive conversation around the later life lending market. Thank you for your time. Thank you for listening to the Master Later Life Lending Podcast. If you've enjoyed our comprehensive conversations, then please take a moment to leave a review on the app or your favorite podcast platform. Make sure to subscribe, too, so you never miss an episode, and follow us on social media for exclusive content.