The language we use has always been important, but nowadays it seems to be more scrutinised than ever.
The shifting sands of what one can and can’t say in polite society fascinate me and, as much as I attempt to keep up, I almost certainly still fall into some out-of-date terminology. But I will always try.
Within business, language is just as important. You may not get ‘cancelled’ but certain phrases, words and terms can have a pernicious impact on the way we view financial decisions.
When people need help, let’s not make them feel any worse
For equity release, this is particularly true. Time and again I see the lifetime mortgage likened to ‘selling off the family silver’ or phrased as a ‘raid on the family inheritance’; and every time I sigh, think, ‘Does it really matter?’ and try to get on with my day.
I know our little corner of the market has helped tens of thousands of people realise their retirement dreams, or helped reduce the pressure of mounting money troubles. But this negative view still bothers me. And I think it should bother you too. Here’s why.
Mounting costs
First off, things are tough out there. Lockdowns may be done and the pandemic, hopefully, is a thing of the past, but the hard times are far from over.
The cost-of-living crisis is hammering families and, for those approaching the end of their working life or those who have retired, mounting costs are the last thing they need. In fact, the cost-of-living crisis has pushed almost a quarter of retirees into delaying their retirement, according to research from AJ Bell.
Potentially millions of people will need to look at their property as an alternative retirement finance vehicle
What’s more, not only is everything from energy to eggs getting dearer, but so is many people’s biggest and most important expense: their mortgage. The interest rate spike that followed the calamitous mini-Budget has battered — or will soon batter — many people looking to renew their mortgage. According to the Office for National Statistics, up to 1.4 million households face higher rates as their policies expire over the next year, and over half (800,000) are facing their rate doubling.
All of this has prompted the Financial Conduct Authority to warn that a staggering three quarters of a million households are at risk of mortgage default.
All pretty grim news, right? But what does this have to do with language, or the way we talk about finance? Well, what options do people have when they face this grim reality?
Time and again I see the lifetime mortgage likened to ‘selling off the family silver’
Many will be relying on their pension, and a rising number are already dipping into their pot as £3.6bn was withdrawn from flexible pension pots between 1 April and 30 June last year — a 23% hike on 2021,according to the AJ Bell report. For many people, however, pensions simply will not be enough. Property may have to come to the rescue, and this is where the point about language comes in.
Despite so many people needing help as they enter retirement, remortgaging in later life or using products such as equity release is still often looked down upon throughout society. For some reason, tapping into property wealth is seen as a failure once someone reaches a certain age. Regardless of their financial woes, using equity is so often sneered at by the mainstream media and those lucky enough to not need the help.
For many people, pensions simply will not be enough. Property may have to come to the rescue
Tedious tropes, like ‘plundering savings’ or ‘burning through the inheritance’, are ten a penny in most tabloid ‘analysis’ of later-life lending, and these throw-away phrases are at the bedrock of the outdated and unhelpful belief that remortgaging in later life is to be avoided at all costs.
Flip the script
Ultimately, people are living longer, pensions are not going to stretch far enough and everything is getting more expensive. This all adds up to an equation where potentially millions of people will need to look at their property as an alternative retirement finance vehicle.
So, repeatedly bashing this option and presenting it as some kind of failure helps no one. Let’s flip the script. We need to make it less a ‘raid on inheritance’ and more a ‘vital safety net’ on which many home-owners will be thankful they can rely. And, the more people consider this a mainstream option, the more choices, flexibility and competitive rates will be available as new lenders enter the market.
Within business, language is just as important
Essentially, when people need help and the situation is dire, there’s no need to make them feel any worse.
Property wealth is becoming an integral part of lots of people’s retirement plans, and this needs to be accepted without the tinge of negative discourse.
Andrea Rozario is chief corporate officer of Bower
This article featured in the February 2023 edition of MS.
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