Since 2011, the equity release sector has recovered from the downturn and this past year saw more than 21,000 people take out a lifetime mortgage or home reversion plan, the most since the crash.
Equity release lending hit record-breaking levels in 2014, however, now that we march into 2015, we must not rest on our laurels as there is still a lot of room for improvement. Major high-street lenders are now finding it hard to ignore our sector and some may well be mulling over the benefits of joining the equity release industry: Legal & General have now officially launched into the lifetime mortgage market and Santanderwill possibly soon follow suit. The arrival of well-known, respected lenders will have a further positive effect on the equity release market and will also accelerate the modernisation and innovation that has helped catalyse the equity release revival. Furthermore, as interest rates on lifetime mortgages are already approaching historic lows, the introduction of more choice into the market is nothing but positive for the consumer.
The increasing growth of the equity release industry has led to the allure of our market being too much to pass up for companies like L&G. As heavy-hitters like L&G join the party, it becomes more likely that their peers will turn their attention to equity release. As more lenders enter, consumer confidence grows and competition intensifies. We may be in the midst of a snowball of success that will continue to roll along, collecting more major lenders, more new customers and pushing equity release closer, in terms of acceptance, to the mainstream mortgage market. However, at this point in time our market remains a relatively small (but certainly fast-paced) market that is heading in the right direction, but has a lot of climbing still left to do. We must not, in a landmark year such as this, get ahead of ourselves.
The pension freedoms, due to launch in April this year, will cause a major shift in retirement planning for many. Housing wealth must also become an integral part of the finances of the retired and for those who advise upon lifetime mortgages and home reversion plans, an increased number of enquiries and possible customers should be expected. However, an increase in demand and the changes in the retirement market must not dilute the comprehensive, impartial advice that the customers deserve.
With over £1,000 billion of property wealth controlled by the over-60s in the UK, the £1.4bn released in 2014 is simply scratching the surface. 2015 and the coming years will see this figure increase, I am confident of this, but we must continue to improve our products and care for the customer at the same rate.
