The sales of lifetime mortgages have declined in the first half of 2004 compared with the previous six months. You might think that this is something of an anomaly if you consider that the fundamental triggers for lifetime mortgages remain steadfast.
Lenders appear to have played their part to broaden the market with the likes of Mortgage Express, Portman and Standard Life Bank among others offering lifetime mortgages. But despite a myriad of new product offerings, networks and independent mortgage advisers have been slow to add lifetime mortgages to their product armoury.
The sheer complexity of the product also has a bearing on uptake and this is part of the reason that sourcing systems are not yet in the game. Sourcing systems need to be re-engineered to support the sale process from the initial fact find stage through to application. Furthermore, there is a need in the mortgage adviser market for more sophisticated risk analysis tools providing what-if scenarios for modelling future variables, such as projected house prices and mortality rates if the system is truly to support a compliant lifetime mortgage sales process.
Technology providers need to develop specific lifetime mortgages tools at a price the adviser can afford. This will make lifetime mortgages easier to sell, accelerate the sales process, decrease the risk of mis-selling and provide good oversight to compliance management of point of sale activity. Moreover, as we will be in the realm of FSA regulation, point of sale compliance tools need to be linked into a compliance oversight system such as Trigold's Compliance As the number of equity release providers has increased the challenge for the IFA or broker not actively involved in the market on a daily basis is how to ensure that their research is watertight.
Over three years ago I was approached about the idea for a sourcing system for equity release. The proposition was a dream come true. The reality, however, has been a long time coming and has had a number of difficulties attached to it. The problem with equity release is that many of the products available are more intrinsically linked to the property type that other mainstream lending products. Main stream mortgage lending can be relatively easy to source as the main criteria is linked more to the client's circumstances and less so, other than the issue of suitable security, to the property.
The other matter that is part of the equity release criteria for selection may need to be a hypothetical – what if the client moves. Because the main schemes allow full portability the question of the client's intentions for the future may need to play a part in scheme selection today. This is because the chosen scheme, where necessary, needs to be portable to the type of property that the client might want to move to.
One of the first issues which any sourcing system would have to meet are some of the hypothetical circumstances as well as the criteria for the current property.
What sourcing software cannot currently provide or replace is an adviser taking the time to read through product literature, any small print and speaking to the lender. Unfortunately there is no easy solution.
The final requirement for all sourcing software is that it can only begin to replace more manual-based research if all providers are present.