In many ways the world of lifetime mortgages is behind the curve when compared to its residential cousin
Stuart Wilson is technical director of more 2 life
My dad has just turned 80 and has never sent or received an email. He has never – not even once – set a virtual foot inside the world wide web.
I am often simultaneously bemused at and even a little envious of his ignorance of modern technology. Once, when discussing buying a new indestructible toy for my dog (which hasn’t yet fully grasped the concept of the word “indestructible”), I explained to my dad that I would have a look around on the internet to find the best deal. “Does it have a pet section, then?” was his genuinely innocent reply.
Yes dad, it has a ‘pet section’. It’s full of cats. Lots of cats.
While technology has, rather wisely, given my father a wide berth, it has been transformational for most of us, especially when it comes to the way we access, buy and manage financial products. From 24/7 online banking to web-based platforms that facilitate all manner of financial interactions, clients of all ages are increasingly using technology to control their financial wellbeing.
One area of financial services that is lagging behind in the technology stakes, though, is equity release.
The process of applying for a lifetime mortgage is much like a residential mortgage – an application followed by a valuation, offer and completion, with legal work carried out by qualified solicitors on behalf of both the applicant and the lender.
But whereas the residential mortgage market has used technology to improve and – more importantly – streamline the process to reduce the time it takes to get from application to offer and completion, the world of equity release has largely remained wedded to traditional methods.
This means paper applications, written instructions and other ‘old tech’ ways of communicating that can often mean days and even weeks passing by, as paper, letters and other documents are passed between adviser, client, lender and solicitor.
Of course electronic communication is commonplace – I’m not suggesting this is a tech-free process – but in many ways the world of lifetime mortgages is behind the curve when compared to its residential cousin in areas such as:
• End-to-end online processing – from KFI through to Offer
• Paperless and even signature-free applications
• Instant/online approval or declinature of applications (‘decision in principle’)
• Automated valuation and legal instruction
• Online tracking/progress of business
• Automatic email/SMS updates to advisers
Perhaps this is in part a consequence of the typical nature of an equity release client – normally someone like my father in their 70s, 80s or even older…the type of client who, traditionally, would have been far more comfortable dealing with paper and pen rather than tablet and stylus.
But the retirement market is changing, rapidly. Reports of the rise of the ‘IAP’ (Internet Age Pensioner) tell of an increasingly tech-savvy retiree who is likely to be completely at ease with using the latest gadgets.
And the very nature of retirement is changing. The introduction of the new pension reforms last year has transformed the way people access their retirement funds and we believe this in turn will lead to more enquiries for equity release.
Using housing wealth, in conjunction with (and sometimes in replace of) pension funds is likely to become more attractive as clients seek to maximise the greater flexibility they now have and make the most of their retirement.
As this increasingly tech-savvy and financially-astute generation of retirees transitions from their life before work to their life after it, moving from one form of mortgage loan – which secured their home - to another which secures their retirement using that very same asset will become the ‘norm’.
Companies that help deliver these solutions to clients through greater use of technology will not only attract more people to their own proposition – people used to and expecting a technology-based application process – but will also help to modernize an industry that, like my dear old dad, is somewhat stuck in a 20th view of the world.
That has to be a good thing for the industry and for clients – higher volumes of lending, faster loan applications to give clients the funds they need much sooner, lower numbers of applications being cancelled due to delays in paperwork. If this market is to break free of the gravitational forces that are keeping it in single digit sales volumes and reach the stratospheric heights it could achieve – given the overall capacity of this market and the appetite for growth – technology surely must be the key.
Now you’ll have to excuse me, I’m off to the pet section of the net. I may be gone some time…and I’m not even a cat person, really.
