Serving the needs of our aging population is going to be key as we move forward but it is also important our assumptions are not based in what we knew but in what is happening now.
Much of the focus of mortgage propositions has been operational in recent times. This is understandable. The pandemic put incredible pressure on everyone to reassess how they deliver their lending. Many lenders have embraced AVMs, remote working, updated affordability calculators, abandoned wet signatures and automated more back-end processes such as underwriting and offers. More will come, no doubt, with robotics for internal processing and APIs for distribution.
But while lenders have embraced technology to deliver efficiencies and cope with the new operating world, other things have been changing too. Consumer behaviour has embraced the digital lifestyle in dramatic numbers and, importantly, across the age ranges.
The last release from the Office of National Statistics on the subject highlighted the change in trends that was in play even before the lockdowns. 92% of adults in the UK were recent internet users in 2020, up from 91% in 2019 and almost all adults aged 16 to 44 years in the UK were recent internet users (99%), compared with 54% of adults aged 75 years and over.
Interestingly, while there has been little change in internet use for adults aged 16 to 44 years in recent years, the proportion of those aged 75 and over who are recent internet users nearly doubled since 2013.
We have known for some time that our population is aging and that has ramifications for product development for this very underserved market and for how they buy. Our cliched notions of ‘older people’ are being overturned. The baby boomers have earned and borrowed more than previous generations and are quite happy to carry on with that mindset. You cannot stop aging but our current crop of 70 to 80 plus year-olds are changing what it means.
Mortgage lenders are responding sporadically. Weaning ourselves off payslips and understanding the possibilities of pension income, dividends and other income as re-payment doesn’t come easily to many for whom the self-employed still send shivers through the collective underwriting spine. Nevertheless, the over 50s market is a growing one that is arguably more able to flex and leverage its asset and income wealth more than any other.
Age Partnership reported last month that 33% of its customers in the first half of 2021 still had a mortgage, up from 28% last year.
In this regard, a lot of work needs to be done creating propositions and products that resonate with this population. It is not about repackaging old ways of doing business but arguably delivering new ways of lending that go beyond the current limited avenues.
Serving the needs of our aging population is going to be key as we move forward but it is also important our assumptions are not based in what we knew but in what is happening now. This group of people represent a cohort that we have not experienced before in this market. Many will be relying on savings they haven’t got because they were unable to save, didn’t inherit, or saving vehicles have underperformed (endowments) or been underfunded (pensions). The strains on their savings have been considerable too. Many have relied upon them in lockdown or have gifted money to younger relatives for homes or older relatives for care.
Tim Hague is managing partner at Sagis
