Andrea Rozario is chief corporate officer of Bower Retirement Services
“Scammers and con artists.” “Barely qualified to O Level standard.” “Mugging old ladies and old men.”
These are just some of the disappointing comments following on from yet another biased article on equity release.
Who invented internet comments anyway? They have a lot to answer for. Comment threads seem to be the ultimate realm of trolls, naysayers and negative nellies, all given the cloak of anonymity and the platform to spew whatever babble they like.
This gem followed a recent article in The Sunday Times about our industry that I had hoped would be a little more balanced than the rest.
But, of course, it wasn’t. It was a little more veiled, but the sad reality remains that there is a ton of work left to do to show the lifetime mortgage layman the truth of modern equity release.
Firstly, the piece fell directly into the trap of flat out ignoring house price inflation. The article correctly states that, “a £50,000 loan with an interest rate of 5% could become a debt of £104,046 over 15 years,” but fails to mention anything about what most likely happened to the value of the hypothetical house, because it doesn’t fit the narrative.
In truth, over the same 15-year period it’s more than likely that the house would steadily increase in value. We all know this. In fact, even since July this year over-50s homeowners have, on average, seen a surge in their property value of a whopping £7,000. The average property owner over 50 has seen their assets double in value since the year 2000 – but this fact is rarely ever mentioned.
In truth, it’s been going on too long for it to be an error. The long-term ‘cost’ of equity release is always scrutinised, but the long-term benefit of likely house price inflation is almost always omitted.
And that’s not all. In the very next paragraph, another classic is dropped in, as interest rates between our peripheral market and the mainstream mortgage arena are directly compared. Apples and oranges anyone?
The article says: “Average interest rates on equity release are 4.21%, making it an expensive loan, particularly compared to the record-low 2% average rate on residential mortgages.”
Correct. It is true that 4.2% is more than double 2%. But then again, one product requires immediate and frequent repayments, whereas the other does not. So, does such a comparison even have a point? I would say it does not. Plus, the piece makes precious little mention of the various product features, flexibility and safeguards available today.
Next, the article turns to some expert advice. Finally, I think to myself, we are going to hear from someone in the lifetime mortgage trenches.
But no. Instead of asking any one of the hundreds of experienced, qualified expert advisers practising equity release, we hear from a pensions analyst. A pensions analyst who claims he is concerned that “people are tempted into having what they want today, [while] ignoring some of the long-term consequences.”
Well, regardless of not knowing what knowledge our pensions analyst has of the safeguards, the products on offer, and the huge changes in our industry over the last few years, he seems to be suggesting that taking a lifetime mortgage is some slapdash affair used to fund Ferraris and fiestas. It is not.
The process is long, well thought out, often involving many members of the family, and most people not only use the money wisely, but for many it is actually a godsend.
Ultimately, I’m tired of mainstream journalism designed with comments, clicks and shares in mind. I hope to see a time when we will return to facts and balance, but we do, after all, live in the ‘post-truth’ world.
So, for those of us who have chosen to defend products like equity release, the road ahead, it appears,is still long.
I am still up for the journey. I know that the products and advice we offer are vital to thousands of people, so I remain positive. In fact, deep within the comment thread jungle of this article, one post stood out. “What is needed,” this internet white knight proclaimed, “is more transparency, better PR, responsible lenders and heaps of options and protection.”
The truth is that, in the main, this is already the case. What is really needed is for people to understand the reality of modern day equity release – and we can make that happen.
