A survey conducted by Canada Life found that 40 per cent of advisers in the sector think it will contract while 43 per cent expect an expansion in business.
Advisers are similarly divided in their opinion on whether the equity release market will enjoy the same level of activity generated before the final quarter of 2022.
The sector delivered record levels of business from Q1 to Q3, with £1.7bn lent in the third quarter. However, this fell by 17 per cent to £1.36bn by Q4 due to uncertainty in the UK’s economic outlook.
Some 61 per cent of the advisers polled by Canada Life feel the market will return to pre-Q4 2022 levels in 2023, with a third saying this will not happen until Q3 2023. Some 39 per cent of respondents think the market will return to its height by 2024 at the earliest.
Predictions for the market
Six in 10 of the advisers polled predicted that house prices would continue to fall this year and 31 per cent forecast price declines of between five and 10 per cent.
Some 44 per cent of advisers said this would be because of high interest rates, a third put this down to the cost of living and 30 per cent said it would be due to an already inflated property market.
Advisers also believe there will be an increase in younger homeowners turning to equity release this year, but with smaller loan amounts. Some 40 per cent said average equity release loan values would decrease while 48 per cent said the average age of equity release customers would also fall.
Alice Watson, head of marketing communications at Canada Life UK, said: “It’s clear that the current economic climate isn’t helping consumer confidence and that is being felt across the housing market. Advisers are predicting a return to previous equity release transaction levels later this year, or into 2024, with a shift to younger borrowers with smaller loan values.
“The equity release market has weathered previous economic headwinds and provided financial resilience to households across the country. With the right advice, it can offer very flexible ways to meet individual customer needs and will no doubt continue to adapt.”
