Later Life

Advisers expect debt to drive equity release demand in 2020

49% of equity release customers used the wealth in their homes to pay off residual mortgage debt in 2019.

Rozi Jones
|
29th November 2019
Equity Release coins stack
"It’s clear that advisers have a handle on the rising levels of debt amongst over-50s."

More than two-thirds of advisers think that the need to pay off increased levels of debt in retirement will cause the equity release market to expand in 2020, according to a survey by Canada Life.

69% of advisers predict that homeowners retiring with higher levels of debt will be a driver of equity release demand next year, more than double the percentage of advisers who chose this option in 2018 (31%).

Canada Life data shows that nearly half (49%) of equity release customers used the wealth in their homes to pay off residual mortgage debt in 2019, whilst 23% consolidated unsecured debts.

Alice Watson, head of marketing and communications at Canada Life Home Finance, commented: “It’s clear that advisers have a handle on the rising levels of debt amongst over-50s. It’s a positive sign for the industry that advisers expect consumers will turn to equity release to offer them improved financial security.

“With more people expected to use equity release to help manage their finances, the importance of financial advice is brought to the forefront. Using lifetime mortgages to reduce debt may not be the most appropriate solution for everyone. Getting quality, independent advice can help consumers make the right decision, based on their own individual needs.

“In 2019, we’ve seen more consumers perceive their wealth in a holistic manner, acknowledging the role that their property can play in their financial plans. However, there is more work to do – the industry must continue to show older homeowners how they could improve their retirement lifestyle by accessing the wealth stored in their home.”

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