Nearly half (49%) of advisers have seen a rise in sales of lump sum plans against drawdown which enables customers to minimise interest charges by taking money as and when they need it.
The growth in demand for lump sum plans is partly to fund deposits for children trying to buy their first home, with one in 10 customers releasing property wealth for this reason.
The launch of the first sub-5% equity release loan from Legal & General – which is available for homes worth more than £533,000 with minimum loans of £200,000 – is likely to provide a further boost for lump sum sales, Bower says.
Andrea Rozario, Chief Corporate Officer at Bower Retirement Services, said:
“Drawdown continues to dominate the market with the latest market data recording record highs for sales of drawdown and around 70% of all plans now going to drawdown.
“That highlights how innovation has helped to change the market but there clearly still is strong and growing demand for lump sum plans and that will only grow as lower rates are launched.
“Advisers are seeing increases in lump sum sales partly driven by a desire to help children out with house deposits but also from a wider switch in the market to retirement lending rather than property wealth being used to boost retirement income.”
