Master Later Life Lending - By Air

Deborah Reeves: Long term fixed rates, without the silos

• Will Hale • Season 2 • Episode 1

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In this Comprehensive conversation, our CEO Will Hale sits down with Deborah Reeves, National Account Manager at Perenna, this episode explores how collaborative advice can successfully integrate later life lending with next generation homeownership, helping advisers bridge client needs across generations and deliver stronger, more connected outcomes.

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SPEAKER_01:

So welcome to the next of our comprehensive conversations. Today I'm joined by Deb from Perenna, who's our national account manager. Correct. And Deb's going to talk to us a little bit about how mainstream later life lending products have developed to support older borrowers but also younger borrowers as well. So Deb, thank you for joining me today. Do you want to tell our um viewers a little bit about yourself, your background in the industry, and your current role at Perenna?

SPEAKER_00:

Yeah, absolutely. So yeah, Deb Reeves, National Account Manager at Perenna. I've been with Perenna for the two years that we've kind of had a established sales team, if you like. So obviously Perenna, I say obviously it may not be, but um long-term fixed-rate lender um in the residential mortgage space. Um, absolutely, you know, the brainchild of our um founders, probably six, seven, eight, nine years ago, um, takes a long time to build a bank. So, you know, we've been live in lending and in the UK for um, yeah, around two years now. So, you know, done a gradual kind of rollout, um, you know, working out where the longer-term fixed rate world fits and kind of what that looks like. So, you know, my role is to look after some of the larger networks, some of the larger firms, um, but really just you know, help out in terms of the BDM type role on a on a day-to-day basis as well. Um, background for me, I uh very much have been in financial services for well, all of my career, one of those things that I think a lot of us just fall into once you can't aren't quite sure where you want to be. Um, but you know, no regrets thus far for sure. Um I have mainly worked in building societies, mainly worked in the kind of broker-facing type of world. Um, but yeah, 20 years plus in in financial services.

SPEAKER_01:

And you've talked about it a little bit today, but uh the concept of long-term fixed rates, it might be a little bit unusual for the UK customer and advisor. Yeah. But it's a very common product in Europe, isn't it?

SPEAKER_00:

It sure is, yeah. So, you know, yeah, absolutely. Um and Perenna, you know, we wanted to launch the product to the UK market on the back of, you know, options, on the back of making sure that, you know, advisors have got access to all types of products. I think, like you say, the UK totally transactional or has been very transactional in terms of two, three, five-year fixed rates. And I'm absolutely not saying there's anything wrong in that, but it's about providing alternatives because those alternatives bring USPs alongside them. So yeah, it's about additional options rather than saying that, you know, the way we were working or are working, you know, isn't suitable.

SPEAKER_01:

So let's sort of focus on sort of some of those particular situations where the perennial products might fit particularly well. So um you spoke today very eloquently, might I say, about the sort of challenges facing first-time borrowers and particularly saving for deposits and um meeting affordability tests. So how can I suppose the combination of both intergeneral intergenerational wealth transfer, but but accompanied by long-term fixed rate products? How can that that combination sort of really work to support first-time buyers onto the property lab?

SPEAKER_00:

So I think um if I think about long-term fixed rates and you know, those that are just perhaps being used to renting, being used to paying a certain amount per month, a long-term fixed rate can obviously give them that comfort. So I think, you know, we do a long-term fixed rate, but it has only a five-year ERC. So if something's moved, changed, or there's something a little bit different in five years' time, then absolutely, you know, there's an opportunity for product review to do something a little bit different. Um, but what it does do is it provides that stability stability, it provides that comfort. So if somebody is just starting out, it's giving them that confidence that, you know, nothing's going to change, the world around them might be a little bit crazy, but actually, you know, they've got that static position for as long as they want or need it. Um, and as long as the you know, advisor is advising that that's the right thing for them to do. Um, and I guess that teamed with, and what we've seen is it working in both ends of the market. So those first-time buyers looking to get on the property ladder for the first time, but then that intergenerational wealth that's being used to support those first-time buyers is key too. And actually, a long-term fixed rate supports those borrowers as well. Because if you have a fixed pension income that's very unlikely to change over time, then a long-term fixed rate, that stability and security and payment lends itself to that side as well. So that's where we certainly see you know the product being used right now is in those two, I guess, extremes in terms of the market, but those two extremes coming together for that one solution. So yeah, really nice to hear some of the real success stories that you know, Perenna and the type of lending that we've been doing have been able to bring to the market.

SPEAKER_01:

And and do you see that sort of working in practice then? So you you see the same broker helping both parent or grandparent and sort of son, daughter or grandson and daughter.

SPEAKER_00:

Exactly.

SPEAKER_01:

That's fantastic.

SPEAKER_00:

Yeah, and I think that's it. And it's about, you know, as as a broker, as we've talked about a lot today, which is been, which has been brilliant, you know, not just thinking about that situation that's sat in front of you right now, but thinking about, you know, what does their family dynamic look like? Is there, you know, is there anybody else we should be involving in these conversations? Um, bank of mum and dad, various other things have obviously been talked about. But I think, you know, it is, it is, again, you know, I guess using the silos piece around that that customer dynamic, you know, they have a whole world around them as well. And actually, you know, how can an advisor, how can a broker make sure they really tap into, you know, all of those opportunities to make sure the advice is spot on for that scenario?

SPEAKER_01:

That's quite right. And I think that sort of dovetails very well into the next question. So, so sort of you mentioned today that equity release certainly isn't the only solution in in later life planning, which which Richard Air would completely agree with. So with Rios and long-term fixed products offering alternatives, how should advisors position these options within a holistic advice process and and what factors I suppose should they consider when choosing one over over the other?

SPEAKER_00:

Yeah. And it's really interesting. So, you know, we look and you know, yes, we we don't do equity release, but we look at how we're being used in the market as, you know, sometimes we're that pre, you know, we're the pre-equity release option. So actually, if somebody's not quite ready for equity release or doesn't quite fit um the criteria from an equity release point of view, that's where we can step in. So just because we're long-term fixed rate, we can still be a shorter term scenario that, you know, the long-term financial plan is all about. Um, and you know, I I think it is back to my point about sitting down, you know, talking to your customer, listening to their circumstances and really understanding, you know, what is it that you want? Are you looking to make a monthly payment? Would you rather not make a monthly payment? Do you like the idea of a traditional mortgage whereby actually your your balance is coming down over the term? And interestingly, a lot of Rio inquiries, in particular with with Perenna, have termed it turned into term mortgages. So, you know, we can do no maximum age. So, you know, somebody in their 70s, if they don't like the idea of a Rio and want a 20-year, 40-year fixed term, they can do that. And if their priority is to feel like actually the balance is reducing, we have that option. So I guess it's all about, you know, what does the client want from their mortgage? What freedom do they need? And we use the words a lot at Perenna, financial freedom. Um, you know, it's about financial freedom in later life. And if that means that you want to be able to make a payment because you feel like that that's the right thing to do, then you know, we have the ability to do that. If that's not the option and you'd rather spend all that hard-earned pension income on something else, then you know, equity release is is potentially going to be the right option. So, yeah, just about exploring those priorities and needs with with the client.

SPEAKER_01:

Yeah, I I I mean, I I'm absolutely sort of passionate about that in terms of all advisors considering all options. And um, some might say I'm a little bit sort of defensive when talking about sort of equity release advisors, but I actually think the equity release advice sector has come a long way in a short period of time in terms of ensuring all options are considered. And you know, we see Air members using tools such as the Air Navigator tool or or some of the tools that other lenders offer in order to make sure that they are sort of considering all of the options that that are available. I perhaps don't see the same in the mainstream market, if I'm honest. Yep. You know, I I still see sort of mainstream advisors looking only at the products that are in their comfort zone and and and sort not looking at you know, lifetime mortgages which have evolved significantly, allow interest to be repaid, capital repayments to be made, some with zero ERCs, as as we heard today. Exactly. So I suppose my question for you is where and I I expect I know the answer to this, it'll be both, but but where do you see the challenge and the opportunity for pronoun? Is it more sort of moving more mainstream advisors to consider these products, or is it getting equity release specialists to sort of come come down and consider these products?

SPEAKER_00:

And you're right, yeah, you know, the obvious answer is it is a little bit of both, but you know, today I've been uh you know really encouraged by some of the conversations I have. So we did the session, and then after the session, I had two or three um equity release brokers come up to me and say, I need access to this product because actually I had an equity release solution for this client, but it's not right. It's not the right thing for me to do. So I need to rethink and I need to think about how I get access to your products to actually do, you know, make the right solution the one that I'm recommending. So, you know, yes, absolutely, we're we're definitely starting to see that in terms of um in terms of the equity release advisors. I think for the mainstream mortgage advisor, it is all about knowing what options are out there. So, you know, there is an absolute element of self-education. So, you know, you need to know as an advisor what else is out there. Just because something's not necessarily in your remit doesn't mean to say it doesn't exist. And, you know, there's a duty of care out there to make sure that you're up to date with learning new products, et cetera, even if you know you don't necessarily have the access. But surrounding yourself by professionals that can support you, you know, the IFA that might be able to help, the equity release broker that might be able to help. And that kind of reciprocal business piece clearly forms a really nice part of a long-term business plan for a broker. So I think, you know, it's about not thinking really short-sighted, it's about thinking bigger picture longer term, um, and making sure that, yeah, you've got that in your armory, even if it's not something that you can execute yourself, if that makes sense.

SPEAKER_01:

We might be going somewhat off piste here, but but going back to the FCA discussion paper, that there was a focus within that around the cheapest rule and whether that should be sort of um reviewed or reconsidered. Yeah I suppose it struck me, I I mean I'm not an expert in the mainstream mortgage market, but but it strikes me that again that rule can be slightly confusing to some brokers because if a customer comes in with a preference for a two-year or a five-year fixed product and that comes at the lowest rate, that then what sort of capitalist is then for to get them to consider other options such as long-term fixed rate products from Poreno or indeed lifetime mortgages, which again, by their design, a long-term fixed rate product. So do you see challenge in the cheapest rule and how that's applied?

SPEAKER_00:

I definitely see challenge in the in the cheapest rule, and you know, it's back to everything we've talked about in bigger picture holistic advice because you know, the cheapest isn't necessarily the best. And I think you know, this is again about a bit of a mindset shift amongst mainstream brokers that says, no, I need to challenge my network or I need to challenge that piece of regulation because that doesn't feel right. Um, and you know, we have been in that mindset for such a long time that's been cheapest rate, shortest term, pay it off before you retire. Well, my question back to that broker would be why? Yeah. So I think you know, the justification around why you're recommending or looking at alternative solutions, you should have confidence in. Um, but yeah, collectively it's that mindset shift as well.

SPEAKER_01:

And how can sourcing platforms such as AirSump help with that? Because again, I suppose the risk is that as a sourcing platform, we present products back, generally based on cost of borrowing. And I worry sometimes that are we just doing the same job as a price comparison sites because you know, really it's about empowering advisors, as you say. So, how do how do maybe sourcing platforms or or technology providers more generally need to maybe adapt in order to make sure that all these products are represented?

SPEAKER_00:

Yeah, and I think we've we certainly you know start to see that happen. I think a lot of the affordability tools are really playing into that, into that part. There's obviously so many aspects that a broker has to check when they're looking at, you know, a list of lenders on a sourcing system. Um, and it is, you know, you're right, it is empowering the broker with the technology that supports it, but nothing takes away that personal advice, that sitting in front of a client and understanding exactly what they're about, but also understanding your lenders. So understanding that maybe the first two or three lenders on that list probably won't do that, and there's a reason why, yeah. And not being afraid to look beyond that top five, top ten, or whatever that might look like in terms of sourcing. Um, and having the comfort that, you know, talk to the compliance departments, talk to those people that are, you know, marking your cases because, you know, I think if you have those conversations, you'll be pleasantly surprised that everybody wants the same outcome and that is the right product at the right time for the right client.

SPEAKER_01:

So it reminds me sort of I was told once by by someone that actually the the best trait and advisor is curiosity, you know, being prepared to ask the next question and not not not just accepting what comes back through any research tool, but delving down and asking more. So that's been really interesting. So thank you very much for your time today. And uh thank you for listening to this latest in our series of comprehensive conversations.