What does 2019 hold for equity release schemes?

2 January 2019 • Equity release insights

That might seem a bold statement, but the growth in the market over the last two years, along with population shifts, make us pretty confident that current trends will continue. Here’s why: 

Growing over 55 population

UK Population Projections (thousands) 2016 2026 2036 2046 2056 2066
All ages 65,648 69,235 71,814 73,948 75,650 77,043
Aged 60-74 10,023 11,487 12,416 11,933 12,675 12,081
Aged 75+ 5,326 7,078 8,683 10,693 11,338 12,310
% aged 60+ 23% 27% 29% 31% 32% 32%
% aged 75+ 8% 10% 12% 14% 15% 16%

Source: Office for National Statistics, 2016-based population estimates, principal population projections

With the number of people aged 60 and over set to grow from 15 million in 2016 to nearly 25 million in 2066, there are simply going to be more and more of us living longer, and looking for ways to finance that long life – either to do things we have always dreamed of or to make day-to-day finances a bit easier. With property the single biggest asset for most people, releasing equity from property to realise these dreams is likely to become an increasingly important part of the retirement funding jigsaw.

Increasingly acceptable

The growth in the number of over 55 equity release schemes taken out over the last few years indicates that more and more people are considering the wealth tied up in their home as part of the solution to funding their retirement. The number of new over 55 equity release plans agreed by Equity Release Council members in the first six months of 2018 exceeded the entire market in 2014, with an 81% increase on the first six months of 2016*.

More choice

The growth in demand for over 55 equity release schemes has been met by an increase in product choice and flexibility. By August 2018, there were 139 over 55 equity release products on the market, more than double the number available (58) in 2016. 80% of these products offered plan holders the ability to make ad-hoc, penalty-free voluntary or partial repayments to their loans, up from 68% in 2017. The growing number of products, alongside their increased flexibility, suggests that lenders are looking for new, innovative ways to meet the growing demand for over 55 equity release schemes, indicating their confidence that this continues to be an expanding marketing.

Additional pressures

The ever-increasing number of people living into very old age brings additional pressures in the form of mounting care fees – either in-home or residential – with most people having to pick up some or all of the bill themselves. At the other end of the life spectrum, the considerable challenges with trying to get a foot on the property ladder for first-time buyers mean that the bank of mum and dad (or granny and granddad) is likely to continue to be an important stepping stone for growing numbers of would-be young homeowners; in fact the proportion of owner-occupied households using a gift or loan from friends or family to buy their current property rose from 5.3% in 2008 – 9 to 7.9% in 2016 – 17**. Both of these pressures are set to continue to grow, reaffirming our belief that demand for over 55 equity release schemes will continue to grow this year.

As we said, we don’t have a crystal ball, but we’ll keep an eye on the market reports and let you know at the end of the year if our predictions were right!

Sources: * – Equity Release Council, Equity Release Autumn Report 2018,
** – English Housing Survey data, 2008 – 9 to 2016 – 17

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