Jess Trueman, Head of Business Development at Smart Money People is shining light on the barriers of lifetime mortgages based on research from their Mortgage Lender Benchmark. Read more below.
In our H2 2024 Mortgage Lender Benchmark – the industry’s largest independent broker feedback survey – we found that brokers continue to face challenges when it comes to recommending lifetime mortgages.
While lifetime mortgages could provide valuable solutions for certain demographics, significant barriers exist that limit widespread adoption by mainstream mortgage advice firms. So, we asked brokers what they think the main obstacles are.
Knowledge gaps and training issues
A major hurdle identified by nearly half (49.7%) of brokers is a lack of product knowledge and sufficient training. This highlights a crucial need for better education around lifetime mortgages. To feel confident in recommending these products, brokers need to be fully aware of their unique eligibility criteria and risks, or they’ll continue to feel underprepared in guiding clients through the complexities of lifetime mortgages.
Compliance challenges
Compliance remains another substantial barrier, with 48.0% of brokers raising concerns about this area. The FCA has strict guidelines in place to protect consumers, but our study shows that meeting regulations can be overwhelming for brokers, especially when factoring in other compliance considerations like Consumer Duty.
Customer vulnerability
Another important issue raised by brokers was the concern about customer vulnerability, with 31.4% raising this as a key challenge. Of course, brokers need to show careful consideration around lifetime mortgages, particularly when advising older clients on the potential long-term implications. So, brokers appear to be naturally hesitant about recommending a product that may impact a client’s estate or inheritance plans.
Low consumer demand
30.3% of brokers also raised the issue of low consumer demand, suggesting that lifetime mortgages are unappealing to a significant proportion consumers. To overcome this, there needs to be a concerted effort to educate consumers on the value of lifetime mortgages, showcasing the benefits they can bring when used to their potential.
Additional barriers
Other barriers brokers highlighted include the costs associated with additional qualifications (22.9%) and limited access to lifetime mortgage products (18.5%). While these obstacles are raised by a smaller percentage of brokers, they still present challenges that – as an industry – we should look to address. Making the qualifications cheaper and more accessible to brokers would make it easier for them to tap into the lifetime mortgage market. This in turn would make the products more accessible for consumers.
Final thoughts
The findings from our H2 2024 Mortgage Lender Benchmark show that while there’s clearly interest in lifetime mortgages, there are still significant barriers to overcome.
By addressing the key issues raised in the article, brokers will be better equipped to confidently offer lifetime mortgages, making sure clients fully understand their options. Ultimately, overcoming these barriers will unlock the true potential of the lifetime mortgage market. This can only benefit brokers, lenders, and consumers.
The views of contributors are not necessarily those of the Council.
