Property prices have seen huge increases in the last few decades and even since February 2009 the average house in England has increased in value by £75,000, according to the Office for National Statistics.
The generation that is now approaching retirement is one that has benefitted hugely from rapid growth in property prices, but at the same time now faces a challenging pensions landscape that leaves many asset rich, but cash poor.
Final salary schemes replaced by defined contribution schemes and the pensions freedoms have all potentially left thousands of people approaching retirement without the funds they need to support their current lifestyles.
Yet despite the reality of this situation, many of us continue to see our homes as bricks and mortar rather than as a possible pension, and I think a key part of this is a lack of awareness among consumers about the ability to access housing equity through a lifetime mortgage.
Yes, the market has certainly seen stunning growth in recent years, but at £2.2bn in 2016, lifetime mortgages still make up just a fraction of the wider mortgage market. And the potential is there; Britain’s over-55s will hold £1.2tn in housing wealth by 2020, according to Legal & General’s Last Time Buyers report.
For the market to reach its full potential, we therefore need to see more advisers talking to their clients about lifetime mortgages and the positive role that unlocking housing equity can play in retirement. At the very least, we all have a duty to raise awareness about lifetime mortgages as just one other option when it comes to planning retirement.
There are of course advisers out there who might hold the relevant qualifications in equity release but still choose not to advise on these products. This decision is often based on the belief that these are complex solutions, or as a result of assumptions about the market that are now outdated.
I would welcome those advisers to take another look at this market. It has changed.
Several factors have helped the lifetime mortgage lending to grow: new providers entering the market, as Legal & General did in 2015, as well as more flexibility in products. Of course, the fact that we’re now seeing much lower rates than the equity release market of the past has helped as well.
With an ageing population that is rapidly coming to the reality that pensions are not enough to support later life, now is the time for more advisers to enter this market.