"Equity release has been turned on its head in recent years and is a very different market from just a decade ago, so who’s to say that our customer demographic couldn’t also massively shift?"
In fact, despite the lower limit being a positively youthful 55, the average age people use a lifetime mortgage is now over 70 years old. So, equity release is clearly a market full of experienced customers, but how will this demographic shift in the coming years?
According to a recent adviser study by Canada Life Home Finance, many advisers believe the average equity release customer will get older. In fact, as many as 42% of the advisers they surveyed foresaw an increase in the average age of their client base. Not the most shocking revelation, as the impact a steadily growing life expectancy can have may result in us all dealing with older customers in the near future. However in another recent survey the industry as a whole thought the age would drop. Nevertheless, if the average age does indeed creep up, our lenders should be looking to create new products that this elderly cohort can benefit most from.
In fact, I predict that we will see many more customers across the age range and for various reasons. Whilst our society in general is getting older, those who are now entering later age have, when compared to their own parents and grandparents, an entirely different view of how to handle their finances. The Baby Boomers may no longer be the kids and teenagers of the 1960s who embodied the ‘Summer of Love’, but they have carried on their free-thinking attitudes into retirement, and many are looking at options like equity release with a totally open mind set. As this generation gets older, don’t be surprised if they continue to view things like mortgages with a typically liberal approach and drive equity release to even greater heights.
On the other side of the coin, some 30% of the advisers Canada Life Home Finance surveyed said they thought the average age of equity release customers would actually decrease. For me, this is just as interesting. As I mentioned to begin with, although customers can use equity release from 55 and above, most people only use a lifetime mortgage quite some time later, much deeper into their retirement. So, a shift to a more youthful customer base could be an interesting, and challenging, development for us all.
Equity release has been turned on its head in recent years and is a very different market from just a decade ago, so who’s to say that our customer demographic couldn’t also massively shift? If this were to happen, and our customers became younger, we would all have to react. Our lenders would have to create more products that factor in for a customer base who will demand more flexibility and choice, and our adviser population would have to follow suit and be able to jump from older customer to younger at will, tailoring their advice to a wider set of situations.
This will be an interesting development, of course, but you only need to look at how our industry has shifted from the days of lump sum products to today’s domination of drawdown to realise that equity release is a flexible market ripe for any change.
Ultimately, whether equity release customers get older, younger or stay about the same - we are ready for the next chapter. The lifetime mortgage has grown and evolved into such a strong suite of products that we are not just a little niche any more. As we look ahead to the future, we should be pleased that equity release is helping people across generations, but also look to how we can improve our products, and indeed advice, for everyone interested in accessing their property wealth.
