Equity release products triple since 2007

The number of product options offered by members of The Equity Release Council grew by 34% in the year to August 2017, taking the number of product options available to 78.

Related topics:  Retirement
Rozi Jones
13th September 2017
Nigel Waterson Equity Release Council
"The explosion in product options over the past decade is testament to the work done by the sector to meet increased consumer demand"

By contrast, just 24 product options existed in 2007, representing an increase of 225% in the past decade.

As the market has accelerated, a total of 51 new products have come to market since 2014.

Total lending also reached a record of almost £1.4bn in H1 2017, up from £0.9bn in H1 2016. If current trends continue, annual lending will reach £3bn for the first time in 2017, whereas ten years ago annual lending was just £1.2bn. 

As of August 2017, over two thirds (68%) of product options allow customers to make ad-hoc repayments free from early repayment charges to help reduce interest accrued over the lifetime of the loan.

Other increasingly common product features are drawdown and inheritance protection, downsizing protection, and the ability for full or partial interest payments to be made each month.

Average equity release rates fell again between January and July 2017, as greater competition in the market continues to apply downward pressure on pricing. A fall of 15 basis points took the average rate down to 5.30%, from 5.45%. On an annual basis, there has been a fall of 66bps from 5.96% in July 2016.

The data also shows that an increasing number of homeowners aged 75-84 are unlocking the wealth in their homes. Between H1 2016 and H1 2017, there was notable growth in the proportion of new drawdown plans being taken out by this age bracket, rising from 23.2% to 25.1%. This trend is also reflected among customers taking out new lump sum plans: those aged 75-84 made up 13.6% in H1 2017, compared with 12.3% in H1 2016.

Nigel Waterson, Chairman of the Equity Release Council, commented: “The explosion in product options over the past decade is testament to the work done by the sector to meet increased consumer demand with solutions tailored to varying customer circumstances.

“Importantly, such innovation has gone hand in hand with a continued commitment to consumer protection through regulated financial advice, product safeguards and independent legal advice guaranteed by members of The Council.

“Such growth also comes at a time when the challenge of ensuring adequate financial provision for consumers in later life has never been greater. The UK’s older population continues to grow and the reality of a shift from final salary to defined contribution pensions will likely result in future retirees facing a greater savings shortfall in later life. It is therefore clear that the role of housing wealth in funding retirement will only become more important in the future.”

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