Third Of Retiree Mortgage Market Made Up Of Equity Release Products

Third Of Retiree Mortgage Market Made Up Of Equity Release Products

For every £1 that was accessed by the UK population over 55-years-old through a pension scheme, 50p of housing wealth was withdrawn via equity release products.

Equity release has enjoyed huge annual increases over the last seven years and is now considered to be a mainstream financial planning option to help those in later life. The Equity Release Council’s Spring 2019 Market Report found that annual lending increased for the seventh consecutive year to £3.94 billion by the end of 2018.

Between July and December 2018, 43,879 over-55 homeowners used equity release products to access money locked within their home. This represents a 23% increase from the figures within the Spring report in 2018. Of that amount, 24,907 new plans were agreed which also highlights an increase of over a fifth since H2 2017.

Over a third of mortgages held by people in the UK over 55-years-old are now choosing mortgage options that help with their older life. Lifetime mortgages, equity release options that recoup the loan after the house is sold rather than asking for monthly repayments, increased by 25% during 2018. Many users of this service choosing to withdraw the loan in monthly instalments in order to use it as a supplement to their income in later life.

Those looking to make housing alterations to help in later life or those looking for additional money to help younger relatives used drawdown lifetime mortgages. 64% of new customers opting for drawdown plans in H2 2018 and taking an average amount of £38,000 from the value of their home.

David Burrowes, Chairman of the Equity Release Council commented:

“2018 saw equity release enter the mainstream of financial services as an increasingly popular way to meet important and diverse social needs in later life. Flexible options to access housing wealth are helping the nation’s growing population of older homeowners to fund lifestyle purchases, satisfy daily needs, support long-term financial planning or assist their families.

“As the demand for equity release grows, so does the need for quality advice. It is vital that consumers have access to professional support that considers short and long-term needs, the broader retirement picture and the role of family in decision-making. Products recognised by the Council remain the only route which guarantees product safeguards, regulated and qualified financial advice and independent legal counsel to help identify whether they fit a customer’s later life needs.

“Equity release is not a ‘silver bullet’ for every retirement need, but a growing number of homeowners are finding it can be a solution to meet a range of financial goals.”

Alice Watson, Head of Marketing and Communications at Canada Life Home Finance, said:

“Equity release continues to go from strength to strength. Seven straight years of growth is powering home finance products into mainstream financial planning. And like any healthy market, providers are responding to demand. New and innovative products are providing more flexibility to homeowners tapping into the value of their property, for instance by allowing customers to receive monthly income, make penalty-free repayments or guarantee a minimum inheritance percentage to leave behind.

“While 2018 was another milestone year for the industry, our research has shown that advisers expect equity release to continue to grow in 2019. We are seeing customers become more comfortable viewing their assets holistically when planning for retirement. Our data shows that more people are choosing to use their property wealth to fund lifestyle purchases such as new cars, holidays, and property renovations that make their homes more comfortable and enjoyable to live in.

“But if the industry is to continue to grow, it is vital that there is an adequate supply of qualified advisers to meet the rising consumer demand. In order for this to happen, advisers tell us that greater support to help them become equity release-qualified is key to helping make equity release more attractive in 2019. That is why we are running workshops to help more advisers get qualified, and assist those already qualified to learn more about industry best practice and how to improve customer outcomes.

“It is encouraging to see that customers are increasingly aware of the role their property wealth can play in providing the retirement lifestyle they want. With more advisers becoming qualified and continued innovation from providers, there is no reason the equity release market cannot grow even more in the coming years.”

Will equity release continue to increase in the future? Is this the most viable option for those looking to supplement their later life income or for helping younger relatives purchase property?

 

Martin Parrin

Martin is a Senior Content Writer for Today’s Conveyancer, Today’s Wills and Probate, Today’s Legal Cyber Risk and Today's Family Lawyer Having qualified as a teacher, Martin previously worked as a Secondary English Teacher that responsible for Head of Communications. After recently returning to the North West from Guernsey in the Channel Islands, Martin has left teaching to start a career in writing and pursue his lifelong passion with the written word.

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