But according to Defaqto, the industry needs to address several issues before it can grow and be more competitive, including its funding issues and more consumer confidence.
“Increased competition should result in a narrowing of the interest rate gap between lifetime mortgages and long term fixed rate residential mortgages,” said banking specialist David Black.
The no negative equity guarantee is another reason consumers have had to pay interest rates averaging 0.7% higher each year, said Defaqto.
Black said: “Equity release has long been thought of as a sleeping giant but, given the perilous state of many people’s pensions, it can only be a matter of time before the two types of equity release schemes – lifetime mortgages and home reversions – become a more integral part of retirement planning.”
Several providers have exited the market over the past couple of years citing either the finance drought or seeking profit elsewhere, said Black.