The level of customer interest in equity release shows no sign of slowing down, with an 8% rise in equity release activity from July to September 2019, compared to Q2.
In the UK at present there are 23 million people aged over 50 and with potential equity release customers spanning from their 50s to their 90s (and beyond) the market has a range of differing product requirements to accommodate.
As well as being a diverse group, the lifestyles and needs of over the over-50s are changing – for instance, nearly 14 million adults intend to remain in their current home when they reach retirement rather than downsize, reflecting desires to stay in familiar surroundings and the lack of suitable housing stock in many areas. More will be living alone in retirement, which can be expensive, and the Equity Release Council estimates that there will be more than four million over-65s living alone by 2020, whether due to divorce, the death of a partner or choosing not to marry. There is also a shift away from leaving large inheritances to their relatives, with 28% of recent poll respondents to a recent survey stating that they do not plan to leave money to younger family members, largely because they either intend to spend all their savings or they do not have any spare funds. All of these factors play into the reasons why some may decide to release equity from their homes and the assortment of needs that lifetime mortgage products must meet.
Financial advice can help people to navigate important decisions and life changes during retirement, with surveys of advisers showing that clients over 55 are likely to change their financial plans for retirement after receiving advice. However, research suggests that many people are missing out on receiving good quality advice, with a report from the Pensions Policy Institute showing a fall in the number of people receiving advice after age 65.
While much attention has been given to the record breakingly low interest rates on equity release, there may be other features beside rates which make a product more attractive to an individual customer. In 2019, the range of product offerings has risen significantly to provide options for differing customer needs, with notable features including inheritance guarantees, voluntary repayments without charge, downsizing options, sheltered and age restricted housing options, and regular interest repayments. Earlier this year, research showed an 80% rise in product options allowing customers to make regular interest payments from the start of the year to August.
As the potential customer base for equity release increases in size, and customer demand continues to rise, it remains important for product offerings to reflect the incredible diversity of the over-50s as a demographic.