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Equity release has more choice than ever, but let’s see more flexibility – Rozario

by: Andrea Rozario, chief corporate officer, Bower Retirement
  • 28/07/2016
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Equity release has more choice than ever, but let’s see more flexibility – Rozario
Headline grabbing rates are always a bonus, but lenders in the equity release market should also focus their attention on flexibility within products, writes Andrea Rozario.

Never before has there been so much choice in the equity release market. There are now approximately 66 equity release plans out there for customers to consider, and this number will surely grow as we travel through the second half of the year. With OneFamily and Legal & General entering the market in 2016, Nationwide considering joining later in the year, and other big name lenders monitoring equity release carefully, yet more customer choice will come.

What’s more, not only are there record numbers of products on offer, but the available interest rates are varying too. According to analysis from Key Partnerships, the interest rates on offer throughout the 66 available equity release products range from as high as 7.27% to as low as 2.96%.

This is all great news for the equity release industry, but what else can we do to go further still? Well, 83% of Bower Retirement advisers expect an increase in lending over the next six months, but there are things they feel could further increase lending and help customers.

Despite the growing number of products on offer, and the low interest rates available on certain lifetime mortgages, flexibility still concerns advisers and their clients. When asked, ‘which is more important to your equity release clients: interest rates or flexibility?’ less than 10% of Bower advisers claimed that rates were the key issue.

Furthermore, when asked what they felt was the main barrier to clients taking out an equity release plan, over 40% of Bower advisers responded that their clients who have turned down equity release had concerns relating to a ‘lack of flexibility’.

It’s true that a low interest rate is often important to the customer, and a sub-3% rate is certainly headline-grabbing and will be the perfect option for many clients. However, with a product like the lifetime mortgage that typically runs for life, built-in flexibility is, for some, absolutely essential. Nobody knows what the future will hold, so being able to switch products or leave with low penalties needs to be a consideration in the advice process.

The ongoing focus for future products and lenders new to the market should be creating equity release plans that grab the headlines for being flexible and innovative, not just for having competitive interest rates.

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