Demand for equity release is growing and the number of product options has more than doubled in the space of a year. That is the key finding which stands out from the Equity Release Council’s Spring 2019 Market Report. But this massive increase in options makes the need for quality advice on equity release more important than ever. In this blog, we take a look at the report in more detail.
Product options more than double
Back in January 2018, there were 86 different product options available to homeowners over the age of 55 who wanted to access money from the value of their property. The Equity Release Council (ERC) found that number had jumped to 139 by August 2018 and increased further to 221 in January 2019. In other words, the number of product options has more than doubled in just 12 months.
Wide range of features
The increasing range of features available is good news for customers. There are plenty of options which are flexible enough to suit individual needs.
The ERC specifically highlighted:
- Downsizing repayment options – More than half (52%) of products now offer this protection, a “notable rise” on last year (42%). The feature allows customers to downsize to a smaller property and repay their loan without incurring an early repayment charge.
- Interest serviced products – These allow customers to make regular interest payments to minimise costs in the long term. However, the payments can be switched off at any time with the interest rolled up and added to the loan. Some 20% of products now offer this feature, compared to 9% a year ago.
- Regular income payments – Some lifetime mortgages now offer monthly payments over a fixed period instead of a lump sum. This feature was introduced to the market for the first time in the 12 months to January 2019.
There was also a rise in the number of products with features including drawdown facilities, inheritance guarantee, sheltered/age restricted accommodation, fixed early repayment charges and voluntary/partial repayments with no charge.
A word of caution
There is no doubt that the number of different features and flexibility on offer is appealing to homeowners looking to access the wealth in their property. It also means there are ways to reduce the cost of the process, such as paying monthly interest or making voluntary partial repayments.
However, we agree with the Equity Release Council, “there are a number of considerations beyond simply comparing interest rates when choosing a suitable product”. In our view, the wider range of options available means the need for quality advice from regulated professionals is greater than ever before.
We offer quality, regulated advice
David Burrowes, the chairman of the ERC, said, “As demand for equity release grows, so does the need for quality advice.
“With the rise in new products and the subsequent growth of the market, it is vital that consumers have access to the right information and professional support that considers both their personal and family needs along with the broader retirement picture and how it is evolving.”
At Access Equity Release, we completely agree.
Our highly trained advisers will fully explain all the available options and their implications. You will receive the best standards of professional financial advice to help you make your decision. Our advisers are also authorised to look at other regulated products which means they can recommend the right solution for you.
Other points from the ERC report
We think a few other points from the report are worth noting too:
- The number of customers in the lifetime mortgage segment of the overall mortgage market increased by 25% in 2018. The ERC attributes the growth to the growing appeal of safe and flexible equity release products. For comparison, the first-time buyer market grew by 1%, remortgages by 10% and buy-to-let remortgages by 11%.
- Almost 44,000 homeowners over the age of 55 accessed money from the value of their homes in the second half of 2018 – a rise of 23% on the same period in the previous year.
- Drawdown lifetime mortgages were the most popular type of plan. 64% of new customers opted for them while 36% chose lump sum plans. Less than 1% of new customers went for a home reversion plan.
- The average age of new customers was 70 for drawdown plans and 68 for lump sum plans. Quality advice should ensure that access to equity is proportionate to age and potential longevity.
If you would like to know more about equity release and the latest options available, please get in touch and one of our advisers will be happy to offer you a personalised service.
You can download the full Equity Release Council Spring 2019 Market Report here: http://www.equityreleasecouncil.com/document-library/erc-spring-market-report-2019/