The changing intermediary environment will drive large growth in the equity release market, according to Bob Wright, corporate business manager for Northern Rock.
Speaking at the Council of Mortgage Lenders’ (CML) ‘Equity Release ‘ Bridging the Gap’ seminar in London last week, Wright said the search for new revenue streams in growth areas and a move to selling a more diverse product range would fuel the growth.
According to figures from Safe Home Income Plans (SHIP), the equity release market has grown from £85m in 2000 to an expected £500m this year. However, unlocking the customer base would prove a challenge and Wright said intermediaries would have to further change their business models. To access the growing elderly market, he said brokers would need to forge links with retail organisations, affinity groups and charities which all had distribution outlets into the sector which could be used.
However, Peter Williams, deputy director general of the CML, warned there was huge potential for problems against a market backdrop characterised in the past by suspicion and questions over the market on the whole.
Although much had been done to change this perception he said it was imperative to ensure equity release was not seen as the: ‘Heineken beer of the financial market, being able to reach the parts other financial products could not.’
The CML has launched a guide to the equity release market and Williams said it aimed to force consumers to question their choice to ensure they were fully aware of the risks involved and that they understood all the implications of that choice.
A database of statistics is also being established, according to Williams, as there were no comprehensive figures to track market progress and allow lenders to assess market share.
While this remained a challenge, he said work was ongoing with SHIP, central government, local authorities and housing associations to ensure all bases would be covered.