Our predictions for equity release in 2020

2 January 2020

Prediction 1 – The equity release market will continue to grow 

Our analysis of the evidence from 2019 suggests that the equity release market is going to continue to expand in 2020

The three busiest quarters in the equity release market have all occurred since the third financial quarter of 2018. Q3 2019 saw over 55s release £988 million in equity from their homes – that’s £11 million and 11,419 new plans a day – up by 8% from £911 million in the previous three months, according to analysis by the industry body, the Equity Release Council. We anticipate demand will at least hold steady or increase in 2020, as more people consider different options for funding their increasingly long retirements. 

It’s not news that more of us are living longer – in fact, official projections estimate that the over 55s will make up more than a third of the UK population before the end of the decade – and this continuing trend is a key reason why demand for equity release is going to hold strong, if not grow: 

Source: Equity Release Council analysis of Office for National Statistics (ONS) 2018-based population projections

Changing attitudes to retirement are also significant. A survey of homeowners last year by Nationwide Building Society found that two-thirds don’t want to downsize in retirement; our increasingly active retirements in which we maintain the same hobbies and lifestyle expectations as we did when we were working is also contributing to the demand for equity release, as people look to find ways to stay in the home they love. 

Prediction 2 – Property will increasingly be part of retirement financial planning 

There is growing evidence that property is increasingly being considered when people plan their retirement finances; a study by Canada Life found that 28% of the 1,000 people questioned said they expected to use both their pensions and their property wealth to fund their retirement. 

Increasing property prices, which have boosted the property wealth of the over 55s, are a factor in this, on top of the pressure to fund increasingly long retirements, but there are other societal changes that are also helping to trigger the changing attitudes to the role property might play in retirement finances. A survey by investment firm Hargreaves Lansdowne found that one in six people expect still to be paying off their mortgages when they reach state retirement age; this means a rethink about how people can fund staying in the home they love if they still owe money on their property when they become too old for a conventional mortgage. In fact, a survey by Canada Life of 1,000 successful equity release scheme applicants found that 46% had used their loan at least in part to pay off an existing mortgage. 

Prediction 3 – more innovation and choice in the equity release market 

2019 saw a record number of products with a wider range of features than ever before; we again expect this trend to continue in 2020. The growing demand for equity release is seeing more lenders move into the sector, with innovative features to appeal to particular segments within the over-55s market. Products with regular income payments features were new to the market in January last year; other new features in 2019 were lifetime mortgages without proof of income or affordability checks and loans on houses with a home-based business, thatched properties and B&Bs. Look out for similar innovations this year. 

Prediction 4 – The need for expert equity release advice will become stronger 

With a bewildering array of products and features, the case for finding a trusted adviser who really knows the market and can steer you through it to help you decide whether equity release is an appropriate solution for you, and which of the hundreds of products meet your personal requirements and ambitions, is going to get even stronger. 

Research released by Canada Life last month suggested that 15% of UK homeowners don’t understand equity release sufficiently to consider it, despite the growth in the market. As the pressure to fund longer retirements grows, we predict there will be an increasing demand for honest, transparent advice. 

Prediction 555+ Equity Release will continue to grow

We took on our sixth expert equity release adviser in 2019. Our ambition is to help more people than ever in 2020 realise their retirement dreams, so we expect to be writing more equity release plans through our growing team of advisers who are motivated always to act in our clients’ best interests.

If you’d like to understand how equity release can help you realise your retirement dreams in 2020, we’d be happy to have an initial, no-obligation meeting. 

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