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SHIP: Equity release optimism gains momentum

by: Mortgage Solutions
  • 22/02/2011
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SHIP: Equity release optimism gains momentum
Equity release providers are increasingly optimistic about the future of the market, with 67% predicting growth this year, according to Safe Home Income Plans (SHIP).

SHIP’s survey of its members found that 60% forecast that there will be new entrants to the equity release sector this year.

In addition, SHIP’s survey revealed that 75% of its members think the market is stable enough to withstand further economic pressure.

Simon Chalk, chairman of the Society of Equity Release Advisors (SERA), backed the predictions, saying two annuity providers and one existing mortgage lender will re-enter the market to offer home reversion products.
 
He said: “This is positive for the market and will help encourage competition among providers and boost market growth.”

SHIP revealed that 60% of members believe the government will look to the industry for help with public policy issues, such as meeting the pensions gap and funding care. 

The majority of members (60%) said there is potential for a government department to ‘own’ equity release, providing a further endorsement of the sector.

However, more than 85% believe further work is needed to increase awareness and understanding of equity release amongst the government and consumers. 

Andrea Rozario, director general of SHIP, said there was growing acceptance of equity release as a retirement planning option: “With longevity increasing and the government making it clear that the state will not be able to provide all encompassing retirement funding, other options must be considered.”

However, she added: “It is important that those who are entitled to state support fully understand what this will involve. We need to build on the good work already done to ensure that consumers in particular understand equity release so that they are able to weigh it up alongside other retirement planning tools,” she explained.

“There are many opportunities ahead for growth and engagement, and the appetite to do so is evident amongst providers.”

Robert Brennan, director of advisor firm The Right Equity Release, said: “I think that small lenders in the market will continue facing funding pressures.

“On the supply side, we need new providers, new products more funding and competition to help revive the market.

“On the distribution side, we need competent advisors who have good understanding and experience of the market to be able to direct their customers correctly.”

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