The number of people taking advantage of the wealth tied up in their homes has grown to record levels, and with increased recognition across the board from consumers, politicians and regulatory bodies, equity release is playing a much greater role in financial planning for retirement.
Increased support from the FCA this year has resulted in an internal review of some of its rules and regulations, over concerns that they may be restricting the market. Proposals to remove the requirement for affordability checks and discussion around a potential stand-alone qualification for equity release, are testament to the fact they are taking the role of lifetime mortgages more seriously, and that they wish to assist rather than restrict development within the industry going forward.
This regulatory acknowledgement couldn’t have come at a better time, as more conventional routes to funding retirement have seen yet more upheaval in 2016. Pension changes this year mean that it’s not only harder to qualify for a full state pension, but that without proper advice, there is a far greater risk that pensioners may run out of money before they die. Add to this the historically low annuity rates and interest rates on savings, and there is a very real need for something more to help the population in later life.
The demand for equity release has been further heightened by the ever-increasing choice and flexibility in the plans made available to those 55 and over. A growth in product innovation has given customers the option to choose downsizing protection, make monthly interest repayments or include inheritance protection in the products they choose to best suit their needs. Falling interest rates and increased competition have really made this a consumers’ marketplace, enabling customers to make the most of their homes with plans tailored to their individual requirements.
There has also been a marked improvement in the resources available to help educate advisers, bringing more of them into this expanding market to help meet the growth in consumer demand. The launch of the Adviser Guide to Equity Release from the Equity Release Council was a key milestone this year. Created and sponsored by Pure Retirement, it is aimed at advisers new to the market or considering entry, offering a step by step guide to the industry and the end to end advice process, including an introduction to the market, guidance on marketing approach, as well as a toolkit of invaluable resources, available exclusively to advisers who take on council membership.
Lenders have radically improved in the ways they now help their advisers, with streamlined online portals to simplify day to day processes, case tracking applications, and dedicated marketing toolkits which offer resources to reach more clients and help their businesses grow.
Increased events across the country led by lenders and clubs like the Premier Equity Release Club, Equity Release Club and L&G Mortgage Club, have also been instrumental in opening up the world of later life lending to mortgage brokers and financial advisers new to the opportunities that equity release is able to offer.
The market is going from strength to strength, now firmly established as a fundamental consideration in planning for later life. Where many high street lenders are unable to help older borrowers reaching retirement, lifetime mortgages can offer a much-needed solution, meaning a financially improved future for their customers and a very bright future for equity release.