Over the last twelve months we’ve seen the market grow as more advisers and clients become aware of the value of equity release.
Research we carried out at the start of the year showed that advisers expect demand for equity release to continue to grow, mostly due to a shortfall in pensions savings, and this has certainly been reflected in the trends equity release providers are seeing.
Broadly speaking, we have seen a shift in the reasons people are releasing equity, with increasingly clients using the cash to plug their retirement income gap, rather than more luxury items like a cruise or a conservatory.
We are also seeing the emergence of a new trend of people retiring with outstanding interest-only mortgages, and looking towards equity release to help pay them off.
Equity release is not a product in the purest sense; it’s a process which enables retirees to access the cash locked up in their home. And as a result it is slowly becoming viewed as essential for a great number of people who are cash-poor, but asset-rich.
Growing the market, rather than fighting over market share, is a key objective for the industry and the relaunched Equity Release Council will be crucial in helping us achieve this goal.
As a body they have committed themselves to changing people’s perception of equity release, and the launch of the new SHIP Standards Board for advisers, set up to complement the existing standards board for providers, will help to instil further confidence in the industry as a whole.
The biggest barriers advisers say they face when recommending equity release are clients’ misconceptions of the product, and clients’ concern that they won’t be able to leave an inheritance for their children.
There are equity release products on the market that allow people to ring-fence an inheritance, and anecdotal evidence also indicates an attitudinal change in families’ expectations when it comes to inheritances, with a rising number of clients finding that their children are not expecting an inheritance, and would, in fact, rather their parents lived comfortably in retirement.
Over the next year we expect the market to continue to grow steadily and to see some innovation from providers, with a focus on offering products that allow clients to service their loans. And of course, it would be great to see more providers entering the equity release market.
