How the Cost-Of-Living crisis affects the over 50s

Recent research we carried out¹ found that 32% of people aged 50 to 79 consider themselves vulnerable, with money as one of the main issues. Nearly half (41%) of respondents in their fifties feel negative about their financial future.² Nearly a million more workers over 65 have been hired since the millennium³, illustrating the financial pressure older workers face.

The cost-of-living crisis has added further burden to a demographic already suffering from poor health.

How can mortgage intermediaries alleviate this financial stress?

They must first gain a solid understanding of relevant mortgage products. In its 2020 annual report⁴, the FCA identified three areas of concern regarding consumer advice:

Insufficient personalised advice
Customers’ assumptions not challenged
Evidence lacking to support suitability advice

An FCA review in September 2023 identified similar shortcomings, like failing to adequately consider consumer circumstances.

Affordability
Affordability assessments are crucial for Advisors to understand clients’ finances and provide the best advice. Using the LiveMore Mortgage Matcher® , you can find out how much your client could borrow.

When we spoke with mortgage intermediaries, one described how mortgages were not understood enough. “Most are just order takers. And they’re not doing financial planning so mortgage brokers are the wrong people to do Equity Release.”

Marketing

In 2023, an FCA review found almost 400 misleading promotions. What does this mean for the advice that follows if the advertising is inaccurate or misleading? As a result, the introduction of Consumer Duty was a sign of progress for the sector because adverts did not properly balance risks.

“Consumer Duty is the start of a new era, and it means giving customers all the options that suit their needs while offering transparent advice and always in their best interests.” Leon Diamond.

Our research found that 4% of people in their 50s knew they could get a mortgage, while only 2% of octogenarians thought they could get one.

How the sector can improve awareness

Among the 50-90 demographic, 37% report being disadvantaged by their age when accessing financial services. By attending industry webinars and conferences, intermediaries can learn what they can offer their clients. Additionally, stay updated on industry-specific media content that informs, updates, and instils best practices.

With these resources, intermediaries can assist their older clients in selecting and understanding the best products. For example, while a lifetime mortgage may give customers access to cash, they must also understand compound interest and early repayment charges. It’s worth highlighting that product choices available for the over 50s do include standard capital & interest, standard interest only and retirement interest only mortgages.

Brokers can improve client service using tools like the LiveMore Mortgage Matcher®. Leon Diamond (pictured), CEO of LiveMore, said: “Intermediaries with all kinds of backgrounds in the industry are struggling with the complexities of later life lending. This technology means they can confidently advise their clients.

As well as making everyone’s lives easier, the alternatives presented in the counter-offer feature deliver a big tick in the box for providing a fully compliant record of product selection.”