Strategic Report | Governance | Financial Statements | 13
Homeowners aged over 55 are estimated to own property wealth of over £3.5tn (source: ONS). We estimate that the existing industry loan book including interest is just £46bn. In October 2022, following the UK Growth Plan announced by the Chancellor on 23 September 2022, a number of product providers adjusted and/or removed their products as the markets faced a period of significant interest rate volatility. This reduced the products available to customers. Since the November 2022 Autumn Statement many providers have returned to the market and the number of products available to customers has increased.
Just Group introduced medical underwriting into a niche segment of the lifetime mortgage market some years ago and in 2021 extended it across the Just for You mortgage range. We estimate by collecting medical information and lifestyle factors from applicants, we are able to provide six-in-ten a lower interest rate, or for those who need it, a higher borrowing amount. This market disruption is revolutionising how lifetime mortgages are advised. In October 2020, the FCA wrote to Chief Executive Officers and board Directors of lifetime mortgage lenders and mortgage intermediaries. The FCA set out their view of the key risks these firms pose to their consumers or the markets in which they operate. They outlined their expectations of firms including how firms should be mitigating these key risks. The FCA stated they would be engaging with a number of firms across the industry. In September 2023, the FCA published the results from its targeted review carried out in the previous 12 months on later life mortgage advertising and advice. It found in many cases advice did not meet the standards expected. The FCA has required those firms which fell short to improve the quality of their advice. LONG-TERM CARE SOLUTIONS Care Plans, or immediate needs annuities, are a form of purchased life annuity. In exchange for an up-front premium, they provide a guaranteed income for the life of the insured to help contribute to the cost of their care. Under current rules this income is tax free when paid directly to a registered care provider, with Care Plans available both to individuals entering care facilities and receiving domiciliary support. As such, Care Plans provide a form of longevity insurance to an individual against the ongoing costs of receiving care until their death. On 7 September 2021, the UK Prime Minister announced plans to substantially increase funding for health and social care over the period (2022–2025), to be funded by a new tax, the Health and Social Care Levy. From October 2023, the government had planned to introduce a new £86,000 cap on the amount anyone in England will have to spend on their personal care over their lifetime. The cap was to apply irrespective of a person’s age or income. The government said that the publication of the November 2021 document marked the start of a period of co-production of the statutory guidance with the sector, building on draft regulations and guidance published in 2015. It added that this would be followed by a public consultation early in 2022 with the intention that the final regulations and guidance will be published in spring 2022. In the November 2022 Autumn Statement, the government announced a delay to the national rollout of social care charging reforms from October 2023 to October 2025. CURRENT MARKET AND OUTLOOK There is a substantial market for care in the UK. The drivers of the need for care are strong because: • there are currently around 1.7 million people aged 85 or over in the UK – this is the average age at which people go into care homes; • this is the fastest growing demographic cohort, with its number expected to almost double over the next 25 years, suggesting a rate in excess of 2.6%; • 40% of all people in the UK aged 65 and over are estimated to have a limiting long-standing illness, which may require care in the future; and • the recent focus on pressures within the care sector has highlighted the need to plan for care, and any government reform will provide additional focus on the limited number of solutions currently available.
EXTERNAL GIFL MARKET (£M)
0 1,000 2,000 3,000 4,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Just analysis, ABI
LIFETIME MORTGAGE MARKET SIZE AND GROWTH RATE (£M)
2023
2022
2021
2020
2019
2018
2017
CAGR 10.7%
2016
2015
2014
2013
2012
2011
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000
Lump sum mortgage sales
New drawdown mortgage – initial advance
Existing drawdown mortgages – further advances
Source: Equity Release Council
NUMBER OF PEOPLE (MILLIONS) AGE 60 +
0 10 20 30 40
25%
26.2%
27.9%
28.9%
29.3% 30.7%
2022
2025
2030
2035
2040
2050
Source: Office of National Statistics
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