"Overall, there is still a knowledge gap in the minds of the general public about the option of equity release and how the product has positively evolved over recent years."
The research from Age Partnership, which surveyed 1001 homeowners aged 55 and over, asked the question ‘in the context of equity release, are you aware what the no negative equity guarantee means?’ An overwhelming 71% answered no.
In addition, when asked their opinion of equity release, 23% of respondents believed that they would lose their home.
67% of respondents also said that they have little or no understanding of the impact that interest rates can have on equity release plans.
As part of the research Age Partnership also surveyed their completed equity release clients, and the result couldn’t have been more of a contrast.
For the completed equity release clients, 71% of respondents said that the safeguard of the no negative equity guarantee influenced their choice to take out equity release.
Positively, 82% of completed equity release customers said that they were happy to discuss that they had taken out equity release with their friends. For the general public who haven’t taken out the product, 69% also said that it is something that they would be willing to discuss with their loved ones.
Matt Stirland, director of later life lending at Age Partnership, said: “This data highlights that the equity release safeguards are incredibly powerful for anyone who has started their equity release journey. But for prospecting clients they are simply not understood.
“Overall, there is still a knowledge gap in the minds of the general public about the option of equity release and how the product has positively evolved over recent years. It’s our job as advisers to educate the public about the benefits, features and safeguards. I think that we have come a long way in the education piece over the last few years, but this research just shows how much further there is to go.”
Jim Boyd, CEO of the Equity Release Council, commented: “These findings reinforce the many benefits of equity release for homeowners that are equipped with the right information and understanding of the products available. The Council has long championed the view that, while equity release is not suitable for everyone, it should be on every homeowner’s checklist to consider in later life. Today’s products offer features and flexibilities to suit a broader set of needs than ever before. This can range from wealthier customers seeking to gift money to loved ones to those who wish to supplement pension savings.
“Council standards have underpinned high customer satisfaction and low complaint rates, helping to bring equity release into the mainstream of financial services and encourage more firms into the market. The ‘no negative equity guarantee’ is part of a unique set of protections that mean customers needn’t worry about leaving debt to loved ones, losing their home for missing repayments or being hit by interest rate rises on existing loans.
“However, there is clearly still a need for industry and policymakers to work together to shift consumer mindsets on the overarching role of property wealth in later life planning, as well as product specifics. For consumers there is a real opportunity to demonstrate how equity release can be one in a series of practical solutions to boost retirement living standards and deliver positive outcomes across the generations.”