A record £4.89bn was accessed via equity release products in 2021 by more than 76,000 new and returning customers. To view the final year report click here or read what some of the leading industry experts had to say below.
Alice Watson, head of marketing (insurance) at Canada Life said the results were fantastic for the industry.
She said: “I’m thrilled to see the market return to growth so quickly after the world was turned upside down during the pandemic. Today’s report shows that equity release has not only proven its resilience but also its relevance in modern retirement journeys as people seek to support their lifestyles or help out family members financially.
“As cost of living pressures start to take hold, we may see even more people turning to the property wealth, particularly as house prices continue to grow across all areas of the country. As shown throughout the pandemic, the equity release industry will continue to evolve and adjust its product range to best provide for new and existing customers.”
Mark Gregory, founder and CEO at Equity Release Supermarket said despite the continued challenges of 2021 the industry was well placed for growth. He continued: “This rise is ultimately driven by the high-net-worth market, particularly in London and the South East.
“This part of the UK is now seeing lifetime mortgages as an alternative and highly attractive vehicle for their shorter-term borrowing needs in order to leverage high-value properties.
“This, in turn, is driven by a very low-interest environment and the availability of fixed-term early repayment charges across the marketplace. For instance, in London, our average case size was up 25% year on year and we saw similar increases in the South East – where our average case size increased by 19% year on year.”
David Forsdyke, head of later life finance at Knight Frank Finance, also cited more affluent consumers as one of the factors behind the growth. He said: “We are seeing a significant uptick in wealthier customers using equity release and have built a team of experts to service this demand.
“Wealth Managers and Financial Planners are increasingly seeking our advice on the equity release market, especially for larger loans and more complex scenarios.
“Wealthier homeowners are accessing the equity tied up in their property for a wide variety of reasons, including; as part of estate planning to reduce clients’ potential inheritance tax liabilities. Another major reason is to top up income during retirement.
“In some scenarios the advantages of using property wealth ahead of other assets is clear.”
Will Hale, chief executive of Key, confirmed the role of equity release in supporting over 55’s with their later life financial planning. He said: “Today’s figures highlight the vital role that equity release plays in the finances of many over-55s with almost 80,000 new and returning customers benefitting from accessing £4.8 billion worth of housing equity.
“Key’s market monitor suggests that the increase in the amount released is due to the prevalence of gifting, debt management and remortgaging of existing equity release plans.
“Over 5,200 customers chose to move an average of £135,529 worth of existing borrowing from an interest rate of 5.1% to 3.6% in 2021 – saving themselves interest and benefitting from the increased flexibilities of modern equity release products”.
He continued: “Looking ahead, with customers having focused on meeting pressing needs over the last 24 months, we anticipate that there will be pent up demand for discretionary spending amongst some over-55s who have found that their retirement is currently very different from what they anticipated.
“However, this is likely to be tempered by inflationary pressures and increasing numbers of customers seeking to boost their or their families’ spending power to meet rising household bills. He concluded: “As an industry, we must rise to the challenge of supporting our clients by continuing the evolution that has seen significant growth in innovative products and options for customers.”
- The views of contributors are not necessarily shared by the Equity Release Council.
