With Britons having accumulated £4.6trn in property wealth there is vast potential for housing assets to boost retirement incomes and later life financial planning.
This will surprise no-one who has worked long and hard to support our growing equity release market – but my early impressions as chairman of the Equity Release Council suggest a growing feeling that the long-awaited breakthrough is coming into view.
Equity release products are moving ever closer to mainstream financial services, with the increase in annual lending from 2016 to 2017 exceeding the size of the entire market in 2010.
Last year broke new records as over-55s released over £3bn from their homes, up 42% from 2016: the highest level of growth since 2002.
Signposting to equity release
On a policy level, helped by the lobbying efforts of members and the wider industry, the possibilities for equity release are increasingly being recognised.
For example, the recent Communities and Local Government Select Committee’s Housing for Older People report made welcome recommendations that older consumers should be signposted to advice on equity release as one of a range of housing finance options that can meet their needs in later life.
Ministers are also warming to the need for housing wealth to be included in the retirement options tool-kit for the new Single Financial Guidance Body.
Growing choice and flexibility
Consumers who follow this route will find a growing number of choices at their disposal.
The equity release product range has grown markedly in the last year alone, with new entrants to the market meaning The Council now represents more than 200 member firms and 720 individuals.
Today’s products, which at the last count totalled 89 options, increasingly include flexible features from inheritance or downsizing protection to interest or capital repayment options.
Average interest rates have consistently fallen over the years with many products now offering rates below 5% or even 4%.
Growing choice, flexibility and affordability, combined with suitable safeguards and protections, is attracting record numbers of customers and creating opportunities for providers, advisers and other industry professionals.
It also comes with a responsibility to ensure the customer remains at the heart of our thinking and that the direction of travel maintains a safe and reliable market for consumers.
The reality facing many in today’s society is that property wealth will be instrumental in helping Britain’s ageing population navigate various complex financial challenges in later life.
This ranges from supplementing pension income to facilitating home improvements and the intergenerational transfer of wealth.
The Department of Health and HM Treasury are also grappling with the challenging decisions around funding of adult social care, and have asked the council to be involved in finding sustainable funding solutions.
We will ensure that members’ views are strongly represented in the debate.
Equity release may not suit every person or every circumstance, but the time has come for it to step up to play an increasingly significant economic and social role.
Whichever way you look at it, a more holistic and well-informed approach to how we view our assets – from pensions, savings, investments and property – is vital if we are to deliver better outcomes in retirement for years to come.