The Bigger Issue


Industry experts share Equity release, bridging, alternative investment and the Retail Distribution Revie


If 2012 is anything to go by, 2013 is likely to be a good year for the bridging sector. Indeed, as the impact of the Funding for Lending Scheme on bank funding costs begins to feed through to the terms and availability of credit we believe that interest will grow in 2013. This will be due to more people looking to undertake building projects in order to take advantage of consumer demand – but finding it difficult to secure development finance from high street lenders. The increase in funding and therefore borrowers’ appetites has the potential to have a positive impact on the housing market in 2013 and we may well find a return to growth in certain areas. However, while the signs suggest that the market will start


to recover, the economic indicators and consumer confidence in the first quarter are likely to set the pace for the remainder of the year. With the financial services market having weathered the storm up to the introduction of the Retail Distribution Review, Gender Equalisation and the final findings of the Mortgage Market Review at the end of 2012, many will be delighted to return to ‘business as usual’ in 2013.


Although MMR is the only piece of legislation which will have a specific impact on the mortgage market, we may find that RDR pushes advisers who have yet to receive the appropriate qualifications into this market – or the protection arena.


This is likely to see an increase in competition in the broker market but I would suggest that they will focus on helping existing clients to remortgage rather than actually finding new ones.


While 2012 saw some high profile bridging lenders exit the market, and sometimes cease trading all together, this year is likely to be kinder to this sector as existing providers review their offering with the benefit of these lessons. Signs seem to indicate that we will see increased interest as people turn to alternative property investment for good returns.


Nick McLean, partner, Paxton Private Finance


With the Chancellor’s Autumn Statement bringing a sombre mood to the end of year celebrations, it seems certain that equity invested in the UK’s housing stock will play an increasingly valuable role in supporting the retiring population in 2013 and beyond. While Aviva’s latest Winter Real Retirement Report showed almost one in four (23%) of 65 to 74-year olds are still earning a wage, not everyone has the same option to help maintain their standard of living during retirement. Not only are incomes and savings stretched, but we also expect to see an increasing number of people reaching retirement age with outstanding balances on interest-only mortgages. And so 2013 promises to be a time for continuing product innovation as providers look for solutions to meet people’s changing needs. In advance of the Autumn Statement, the Entitlement Reform report from the think tank ‘Reform’ suggested 55 to 64-year olds will be hardest hit by the welfare squeeze as austerity measures extend until 2018. With little time to make other provisions, the equity tied up in their properties may prove invaluable to help them adjust to their new financial reality. Against this background, we anticipate equity release becoming an ever-more essential product to discuss with consumers as they plan for later life, in ensuring retirees take a holistic view of all of the assets available to them at retirement. Advisers can therefore expect to hold more conversations around the subject in 2013. And with the Funding for Lending Scheme yet to trigger improved high LTV deals for first-time buyers, equity release stands to benefit more people than existing homeowners in retirement. Research from the Equity Release Council showed UK parents have provided over £1.3bn in the last five years to help around 228,000 first-time buyers onto the property ladder. Despite the encouraging growth of lending and healthy levels of activity, the average deposit on house purchases remains beyond the reach of many would-be home owners. So with savings squeezed, releasing equity from their properties is sometimes an option for parents to offer their children this support, and an important option to help navigate the financial


Roger Marsden, head of At Retirement, Aviva


challenges ahead. 26 MORTGAGE INTRODUCER JANUARY 2013


Our experts have had their say, now it’s your turn to have yours. Visit www.mortgageintroducer.com and vote for the expert you think makes most sen www.mortgageintroducer.com


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48