Market and sector uncertainty but advice is still vital

Positivity might have been somewhat lacking in recent weeks, so it’s important to make the most of news that shows a strong progression in our sector and indeed record business figures.

For those of us active in later life lending, we had that recently with the latest figures out of the Equity Release Council which showed lending topping £1.7bn for Q3 this year and the number of plans breaching the 13,000 barrier, up to 13,452.

The lending progression over the last three quarters has been steadily upwards, rising from £1.51bn in Q1, £1.6bn in Q2 and, with these Q3 figures, means the sector has lent £4.84bn in the first nine months of 2022.

Given this, you might be forgiven for thinking the sector would be super-confident that lending would comfortably breach the £6bn mark for the entire year, but I think we’re all acutely aware we are now in a very different place, particularly in terms of rates, product availability, and lending appetite.

There has undoubtedly been a shift since the ‘Mini Budget’ and, while I am still confident that the £6bn lending market can be achieved, it’s also important to know September saw loan activity fall by 10% and, while there has been a degree of renewed stability following political changes, we are clearly nowhere near back to the market we had prior to the disastrous decisions taken by Liz Truss and Kwasi Kwarteng.

In that sense, we do have to be realistic about the equity release market going forward, but fundamentally the demand drivers that existed prior to the ‘Mini Budget’ remain in place.

In fact, you might well argue the demand for equity release products is likely to have grown significantly in recent months, as older homeowners look to potentially fill household income gaps and meet increases in the cost of living, particularly rising energy and food bills.

With inflation running at over 10%, those on fixed incomes – such as pensioners – may find it more difficult than many others to fund those cost of living increases, given they are unable to up their income. I’ve long been an advocate of our sector not being backward in coming forward in terms of potentially helping those property owners who are sitting on hundreds of thousands of pounds worth of equity but are currently scared to put their heating on because of the increased costs.

Of course, there are a whole host of considerations to be made before opting to access housing equity for such needs, especially if there are other assets to be realised, but we should not be scared of offering up an equity release solution if it can make a real difference to a client.

However, we’re all acutely aware the equity release sector is not the whole of the later life lending space and there is a much wider market that advisers need to be engaged and active in, and making the most of the opportunities that exist.

Talking of which, many advisory practices will no doubt be weighing up how 2022 has been for them, but perhaps more importantly now, what might be coming over the horizon in the next couple of months and in terms of 2023.

To say that there is a great deal of uncertainty at present seems like an obvious point to make, but it is within this pocket of uncertainty that advisers find a natural home and can make the most of greater demand for their services as a result.

It will also be obvious to many that older homeowners do not simply move off the advice radar any more, simply because they might have paid off their first-charge mortgage. Far from it.

For a start, so many more people take mortgage debt into later life now, and there are of course a greater number of people who are willing to access the equity they have built up, especially at times of greater need. And that’s not just their need, but those of their family as well.

Overall, therefore even with the lending/pricing/product uncertainty we have, there is still a range of options available to potential later life lending customers and we should remain positive about exploring them with clients who, quite frankly, are increasingly likely to need these solutions in a very uncertain economic and financial world.