Later life lending hindered by legacy systems
Nick Lawler, Head of Business Development at DPR says new technology can drive innovation in products and services within the equity release sector too. Read more from him below.
The UK’s age structure is changing and shifting upwards. According to the Office for National Statistics, by 2050, it is projected that one in four people in the UK will be aged 65 years and over – an increase from approximately one in five in 2018. Currently there are over 24 million over-55s, in 50 years there is projected to be an additional 8.2 million people aged 65 years and over in the UK.
According to the Equity Release Council’s 2019 figures, the total number of customers using equity release reached a record high of 85,497, with a total of £3.92 billion of housing equity being withdrawn by older homeowners. The final quarter of 2019 was the busiest period of the year, with more than £1 billion unlocked. Indeed, over the past decade the equity release market has grown almost four-fold from £946 million in 2009.
As David Burrowes, chairman of the Equity Release Council, commented: “The challenges of a 21st century retirement means that, while unlocking property wealth is not suitable for every circumstance, it should be on every homeowner’s checklist to consider.“ The same can be said for lenders in the equity release sector and those who are considering entering the arena such as pension providers, insurance companies and residential mortgage lenders.
While current lenders need to review their lending policy to cater for their customer base, those new to the sector need to be able to offer a solution for this growing market. Insurance and pension providers need to consider participation in the sector to ensure they retain market share. These solutions need to adopt and incorporate technology as lenders, brokers and consumers now expect the mortgage market to engage with them via digital channels. New technology can drive innovation in products and services within the equity release sector too.
A recent research paper produced by AKG and sponsored by more2life entitled House of the rising sum – exploring equity release opportunities, found that flexibility is key in the sector. When selecting equity release providers, advisers rated competitiveness of interest rates/product pricing, the range of solutions/products, range of LTVs, financial strength and product innovation as key criteria. Technology can quickly deploy improved product functionality and enhanced features that cater for customer choice and lenders can utilise this to meet growing consumer demandshe operational efficiency of automation and continuing growth in API usage can also remove the need for the level of data collected from a customer meaning quicker submission, decision and drawdown.
Increased provider competition and flexible product options has seen the potential of equity release being properly recognised. In order to capitalise on this growth, lenders that want to follow this trend need to ensure that they are utilising a streamlined proven technology solution such as that offered by DPR. Already powering existing providers such as more2life and many more, DPR can ensure that lenders are prepared and able to seize later life opportunities.
Please note the views of our contributors are theirs and not necessarily those of the Council.