When it comes to the mortgage borrowing public in the UK, the numbers tend not to lie.
According to the Centre for Ageing Better statistics, in England alone, over the last 40 years the number of people aged 50 and over has increased by over 6.8 million. That’s a 47% increase. And, the number aged 65 and over, currently 10-million plus, has increased by over 3.5 million, an even greater 52% increase.
Last year, Equifax identified that, of those UK mortgage borrowers whose loans won’t mature until they are past 66, 40% are already aged 55 or over, and 16% of those have a remaining mortgage balance over £100k. Nearly half as many borrowers are currently over 55 and pay over £1,000 a month in mortgage payments.
Having mortgage debt beyond 50 is becoming a much more normalised part of an individual’s financial life; indeed, you might well argue that not having mortgage debt beyond 50 is the outlier borrower group, and as a result it’s clear mainstream advisers in particular are going to be seeing more and more clients who fit this particular bill.
This was a topic of conversation on a recent podcast I hosted with guests, David Hamilton from Legal & General, Nathan Waller from Family Building Society, and Will Hale from Key Group.
You can listen to the full podcast here, however beyond the conversation about the increased ‘normality’ of homeowners holding mortgage debt into their 50s and beyond, comes a perhaps more important and interesting question for advisers in terms of how they address this.
Because, as we know, it’s not simply the case that, for example, a borrower aged 50 through to 65 only has a mainstream mortgage option available to them through that period. Or indeed only has access to a product transfer with their existing lender.
The potential options for such clients are now well beyond this, with the advent of mainstream products such as RIOs, but also those that sit firmly within the later life lending space, such as payment term lifetime mortgages allowing the client to pay some or all of the interest, plus products that offer rate discounts depending on how much interest can be paid, to more traditional lifetime mortgages.
‘Potential’ is the key word here, because that client base – predominantly over-55 for most products but with some availability to the over 50s – now has access to a far greater array of products.
Of course, much of this will be dependent on the advisory firm themselves unlocking access to these products, not just so they can provide the fully-rounded service these borrowers should expect, to know that they have the most suitable solution for them, but also from a firm point of view, to meet Consumer Duty responsibilities around holistic advice and delivering a positive outcome, but also in terms of accessing a range of products that can deliver much stronger income streams.
Now, it’s possible to know all of the above, and still be reticent about making such a move. This is not just an issue for individual adviser firms we must remember; some larger distributors/networks and the like have the same reticence, put off by perceived risk issues and also worries about the cost and resources required to open this sector up for members.
In that sense, and certainly if you are a predominantly mainstream-focused mortgage advice firm or network or distributor head that wants to ensure you can access the obvious potential that exists within the later life lending space, I would suggest you look at what is on offer at the Later Life Lending Summit in Sheffield on the 19th November.
A combined AMI/Equity Release Council event, entitled ‘Uniting for later life advice’ this event will undoubtedly cover many of the areas mentioned above, especially that focus on getting the most appropriate product solution for borrowers at every ‘age point’ and ensuring you have access to these new products and are confident in the ability to give advice in this space.
My view is this will be a particularly interesting series of sessions for mainstream advisers, who might be considering their entry into providing later life lending advice, especially if up until now they’ve not been in a position to access the much wider range of products that are available to over-50 borrowers.
Fundamentally, we must acknowledge the needs of older borrowers are not simply going to be served by a mainstream-only approach; not now, or in the future.
It therefore makes perfect sense to plot your route through to being able to offer all product alternatives, secure the necessary knowledge and information required, utilise the services, technology, process, platforms, etc, that we offer at Air to ease that transition, and begin to deliver service and outcome benefits for both the client and your firm.
Paul Glynn is CEO of Air
