Later life lending continues to thrive with more funding lines coming into a market. Indeed it is now seen as mainstream and is considered a viable part of retirement planning.
The sector continues to be mainly intermediary led in terms of distribution, and with an estimated 80% of brokers saying they either have or will place equity release or similar products in the future.
More recently, Retirement Interest Only mortgages (RIOs) have had a positive effect in terms of lending volumes and assisting some borrowers deemed as interest only mortgage prisoners. However the amount of borrowers assisted has probably not been at the levels initially envisaged. It is highly probable that many lenders will allow borrowers to stay in their houses following the expiration of the mortgage term as long as interest payments are being met. If this is the case, some lenders could well offer these borrowers product transfers and PR wise, this would be seen very positively.
We are seeing more of a focus on lenders’ self-service capabilities – an area that Phoebus has invested heavily in to include both equity release and residential lending. This capability will create operational efficiencies by encouraging borrowers to undertake basic enquiries, make payments, etc, without operational staff being involved. Could the same “portal” be used to undertake areas such as product transfers? Well, we have automated the maturities process in our savings solutions and so with the right “regulatory” wrapping around the outside, then this may be achievable in the future.
Likewise, some collections processes such as income and expenditure completion could also be undertaken using such a portal and will probably be more accurate as the borrower will have their financial situation to hand when completing the details required rather than being pressured over the phone. Using APIs, this solution could verify information from borrowers’ bank statements if open banking permissions are granted and, of course, their current account provider has open banking capabilities in place.
Fundamentally, lenders need to make the customer journey as easy as possible and technology is clearly an enabler to achieving this. With borrowers living longer and mainstream lender products being available well into retirement, the future requirements of later life borrowers needs to be considered including self-service, user interface and accessibility.