Mortgage Soup fires the questions at Dave Harris, CEO at more2life.

Mortgage Soup (MS): How has the lifetime mortgage market shifted in the last couple of years?

Dave Harris (DH): It’s interesting because you have to see the lifetime mortgage market within the wider context of the later life lending market, which of course doesn’t just cover the products we offer, but other mortgages available to older borrowers such as RIOs or indeed mainstream mortgage options.

What I would say is that we’ve seen a significant growth in the number of different lifetime mortgages now available. We’ve moved from a quite traditional product base to one which is much more focused on borrower affordability, with a greater degree of flexibility, and a greater array of offerings which cater to those who want to pay some, or all, of the interest on a mortgage, or even make additional overpayments, with various incentives at play from discounted rates to LTV uplifts.

There has been a lot of talk about the merging of mainstream and later life lending, and to some extent that has happened. For instance, we do see more advisers willing and able to offer advice across the full range of later life lending products that are available, which is absolutely key.

However, there is still quite a disconnect with advisers who are not checking affordability, or considering the fact that an over-55 client has more options with a lifetime mortgage than with mainstream lending. Additionally, simply being unable to recommend a lifetime mortgage because an adviser doesn’t have the authorisation/qualifications to do so is another barrier we’re encountering more frequently.

It’s still a hugely problematic area and the sooner we have a system where advisers have to do all of the above, and later life mortgages are simply the next stage in ‘normal’ mortgage advice, the better.

MS: What does this mean for advisers and how should it shift their advice propositions?

DH: Well, it’s an obvious point to make, but they should certainly be able to offer advice across all later life lending options, or at the very least, be able to recognise where such solutions are available to their clients, and refer to those specialists who can offer advice here.

It probably doesn’t need me to tell them that the likelihood of individuals taking mortgage debt into later life/retirement, etc, is growing year-on-year. And that with the new product options available, it is really up to them to ensure they determine whether those clients are more suitable for a specific lifetime mortgage, for example, rather than just PT-ing them onto their existing lender’s mainstream mortgage.

The other point of course is around the sheer amount of equity, and therefore wealth, held in people’s residential homes, and the likelihood that as time goes by, the need to access that is only likely to grow and grow. I could list dozens of reasons why people may have an increased need to look at their home’s equity, from supporting family members onto the housing ladder to paying for long-term care, funding a pension shortfall to paying off a divorced partner.

The reasons effectively grow each year, and advisers really need to look at the clients they are seeing, the needs they have, and make sure they can provide advice in this area. If they don’t, not only can’t they be certain the client is getting the right outcome, but they are missing out on a potentially large income earner.

The latest letter from the FCA to the Treasury about its plans for the mortgage market, specifically talks about opening a public discussion on the later life lending market. What are your thoughts on this?

I think this plays into what I’ve talked about above and certainly shows how important the later life lending market is, and will be, in the future. We’ve known for some time that later life lending has been a focus for the regulator, and if we’re honest, it has been somewhat suspicious of it. I think regulation of our sector has reflected that.

However, as time has gone by, the need for these types of product solutions just can’t be ignored. The regulator has looked to lenders like ourselves to come up with a greater degree of product innovation and options to cater for a customer base that isn’t suitable for a roll-up product, or quite frankly, doesn’t want one and can afford to make a monthly contribution.

We’ve clearly done that, and will continue to do so. In return, I think it’s imperative that the regulator looks at ensuring all older borrowers have access to all later life lending products, and that’s still not the case. Plus, we need to ensure affordability is being checked for every single potential later life lending borrower as it is for all other types of mortgage borrowers. I’m not sure we’re at that point yet but it’s certainly achievable and we need to get on this page quickly as the number of customers for whom this is suitable is only going to go in one direction.

MS: What are likely to be the key themes for later life lending in 2025?

DH: Well, clearly, that FCA public discussion around later life lending later in the year is going to be a key one to contribute to, but also to see what the regulator wants to do as a result of it.

We know it wants safety and certainty in this space, it wants protection (quite rightly) for vulnerable customers, it wants access to all products available for these borrowers, it wants lenders to keep on innovating with flexible and more bespoke products, it wants full affordability checks, etc. It should also want more advisers involved here, and for there to be effectively no hurdles/barriers in place to allow the advice profession to deliver quality outcomes for the older borrower cohort.

It’s an obvious point to make but what we should seek is that mortgage advice encompasses advice to later life borrowers. That it is the natural progression for customers as they get older, and not a huge step away from what they have been used to.

MS: What do you have planned for the rest of the year?

DH: As you might imagine, there is a continued focus on our product offering and ensuring we continue to innovate in the later life lending, specifically lifetime mortgage, space. I think we’ve proved over the past 12-18 months that we want to create a product range which is more accessible for a wider range of older homeowners, and who are able to make interest payments if they wish, along with the more traditional client that is more suitable for a roll-up interest product.

At the same time, we want to maintain and strengthen our relationship with the adviser community, not just in terms of education on our product range, but also in terms of the way we work with them, our processes, document requests, turn-around times, communication, I could go on.

We feel there’s an opportunity to have a much smoother, faster process with our key intermediary partners, and we’re looking at the ways and means by which this can be achieved, plus the help we can provide in order to support the growth of their advice propositions in the later life lending space.