Later life lending six months on from the mini-Budget

The mini-budget caused absolute chaos to all forms of UK lending, back in October and November most advice practices had to re-evaluate their client's cases at least twice - potentially more for trickier cases. The effect that Later Life Lending saw was similar to Shared Ownership borrowing - the reason why beggars belief though as both of these types of borrowing pose, in our opinion, a lower risk to lenders that a traditional case. In Later Life Mortgages the incomes are usually pension incomes, which are guaranteed, often propped up by part or full-time salaries from employment - with people in later life less likely to be frequent job changers or flit off around the world for twelve months like borrowers in their twenties. In the case of Shared Ownership borrowing the lender holds the first call to all monies from the whole value of the property, in the form of a mortgage guarantee supplied to it by the housing association. Why these mortgages became scarce is a mystery.

The equity release market was significantly impacted by the mini budget as a result of the sharp increase in Gilt rates. This surge in rates led to borrowers reassessing their needs and evaluating whether releasing funds was necessary at the time. Unfortunately, this disruption did not prompt innovation and, in some cases, lenders withdrew from the market. Additionally, higher loan to value products were removed from circulation.

Six months on, the market has somewhat stabilised as clients have grown accustomed to the normalized market conditions. Nevertheless, the landscape has been altered, resulting in an increased amount of equity being at risk. It is crucial for advisers to forecast and strategise client's plans, particularly if gilt rates drop back within the next six years. This consideration is critical as remortgaging may mitigate loss of equity.