At least when it comes to the short-term perspective, the new pension freedoms have not put a dampener on equity release take-up. Judging by the record-breaking quarter two results released last week by the Equity Release Council, it has actually coincided with a considerable increase in both demand and lending.
There are a significant number of underlying drivers for the increase in equity release activity, not least the fact we have many older borrowers struggling to secure traditional mortgage finance combined with a growing number coming to the end of their interest-only mortgage terms, with either no repayment strategy in place or a shortfall which cannot easily be made up.
Cue the move to equity release and, perhaps underlying all of this, is something of a change in perspective when it comes to actually accessing our housing wealth. As a society we are now much more inclined to see where we live not just as a home but as an asset which can be utilised. I suspect much of this is down to a greater interest in property investment which has to be treated as a business venture rather than an emotional attachment, and this might well have shifted us towards a much more pragmatic approach to housing wealth.
All this adds up to a considerable boost for equity release in the form of quarterly lending hitting £384.3m, and new customers up 11% on the previous quarter to 5,414. This, we should also remember, was a three-month period which contained a general election and was widely perceived to have been a ‘quiet one’, with many clients holding back on making big financial decisions until the result was known. Not the case it would seem in the equity release space.
These activity levels, and the ongoing noise around the later life advice market in general, show perhaps what opportunities lie there for advisers. This is a generation of clients which, on the one hand, have access to many more options than ever before yet are also dealing with some unique financial problems which ultimately can’t be solved by mere guidance. The retirement market is likely to represent big business for many years to come and advisers who are not active in this space would do well to look at what it takes to get in front of a large group of individuals who need advice like never before.
