Changing attitudes towards lending and property in later life

With the UK’s population living longer, attitudes regarding property and financial planning are changing across the UK. Statistics and projections produced by Office for National Statistics (ONS) show that the UK’s population is ageing. The ONS states that in 50 years’ time, there are likely to be an additional 8.6 million people aged 65 years and over residing in the UK.

Research by the The Equity Release Council, titled ‘Beyond bricks and mortar: the changing role of property in later life financial plans’ states that 51% of older homeowners are now factoring their homes into their later life plans. A further 44% feel taking out a mortgage or loan to access property wealth in later life is becoming a more common way to manage money, while 40% see it as a “reality” of ageing. The Equity Release Council represent the equity release sector and their aim is to promote high standards of conduct and practice in the provision of and advice on equity release. David Burrowes, their Chairman, states:

‘While the ‘home for life’ mentality persists, our findings suggest people are increasingly thinking of property as a multipurpose financial asset – particularly those aged 45-64 who represent the retirees of tomorrow. There are also signs of willingness to use housing assets during their lifetimes through loan-based products, with resistance driven by practical barriers rather than entrenched views about the traditional roles of property.’

Exploring an untapped resource

Home improvements, supplementing your retirement income or providing financial support for family are some of the reasons people consider equity release in later life.

The report states that property largely remains an untapped resource during many people’s lifetimes, despite their awareness of its potential. Only 4% of over-65 homeowners say they have used property wealth to support themselves in the last year, while 3% have used it to support friends or family.

Henry Knight, MD from Springtide Capital Comments:

‘The retirees of tomorrow increasingly plan to use money invested in property as a ‘nest egg’ for unexpected expenses or to help family members while they are still alive. The UK continues to develop a successful strategy to balance the financial needs of old and young and property has a central role to play. In the financial services industry, the Later Life lending proposition is evolving including improvements in product innovation, consumer education and communication.”

Practicalities

The report shows a growing acceptance among homeowners to view bricks and mortar as a way to support multiple financial goals during their lifetimes. This is particularly evident among those aged 45-64, who are motivated by the potential to help themselves and younger generations.

The most common perceived barrier that older consumers identify when considering a mortgage, loan or financial product as a route to access property wealth in their lifetimes all relate to practical considerations, such as decision-making, cost, flexibility, inheritance plans and financial education.

While the report highlights there is significant intent to use – or at the very least consider – residential property as part of later life planning, current activity suggests more needs to be done to encourage people to take proactive steps. The Council has called for action spanning consumers and their families, industry, regulators and government, to support financial education, product development, consumer safeguards and policy planning. This includes establishing a cross-party Later Life Commission and a dedicated Minister for the Elderly.

At Springtide Capital we are able to deliver solutions tailored to your personal situation, please contact us and one of our qualified specialists will be able to provide you with a personalised illustration.

To speak to us today, call Springtide Capital on 020 3040 4400 to book an appointment.

Sources:

https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/ageing/articles/livinglongerhowourpopulationischangingandwhyitmatters/2018-08-13

https://www.equityreleasecouncil.com/about/

https://www.equityreleasecouncil.com/documents/beyond-bricks-and-mortar-the-changing-role-of-property-in-later-life-financial-plans/