Advice needs to reflect the importance of people's homes in financial planning
It seems a strange situation that Britain has got itself into. Rather than a property being a roof over our heads and a pension being a pot of savings we invest to grow so we have an income after we retire, there is increasingly a blurring of lines.
The latest contribution came in November when the Department of Work and Pensions' report into intergenerational fairness (turns out, there isn't any) found that one of the reasons for the financial imbalance between the generations, was spiralling house prices and a consequent inability of the younger generation to get onto the housing ladder.
Indeed the report, led by welfare reformer Frank Field MP, found that the millennial generation, born between 1981 and 2000, faces being the first in modern times to be financially worse off than its predecessors.
One of the outcomes of this growing financial divide in society has been a sea-change in what our homes mean to us. In the past they were simply bricks and mortar, shelter over our heads for the protection of our loved ones. Now they are something altogether more than this. They are an asset. They fund social improvement, school fees, university fees, development and home improvement costs, holidays, retirements, long-term healthcare and even death duties. They are an investment for our financial futures.
Whether our homes should have become this is another debate and frankly spilt milk. The fact is, if you ask almost anyone on the street why they aspire to be a homeowner, increasing their wealth will be among the reasons.
This is potentially problematic for brokers, who have always advised on mortgage suitability on the basis of house purchase or remortgage. Investment has not come into the equation for residential mortgages - that has been the preserve of buy-to-let and commercial mortgages.
The normal advice process when dealing with a mortgage has covered how long clients intend to live in their home, so that the appropriate term can be agreed. Also how they receive income, to ascertain what mortgage type is most suitable. Whether they have savings that can be offset against their loan is also relevant.
Questions of how they plan to fund their retirement have never come into it.
There may be no easy answer to this issue but there may be an opportunity for intermediaries to demonstrate their inherent value to clients in all of this. Brokers are no strangers to referral partnerships to broaden their offerings and provide the best possible advice for their clients. The next step for the market should be to explore the role of housing in people's financial futures and understand how advice should go further if we are to add real value.
If you have any other queries you'd like to discuss with us, please don't hesitate to get in touch with our Intermediary Support Team by calling 0345 602 2338 or via webchat (Monday to Friday, 8am to 6pm).
This information is for use by authorised mortgage intermediaries only and should not be relied on by customers.