Global Equity Release market forecast to more than treble by 2031

by | Jan 27, 2021

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The European Pensions and Property Asset Release Group (EPPARG) and EY have today published the Global Equity Release Roundtable 2020 survey report, which predicts the global equity release market could more than treble over the next 10 years.

The report gathers data from market leaders across 13 countries globally with established or developing equity release markets, and analyses growth potential. The 13 countries span Europe, the US and Australia, and are considered to be amongst the largest equity release markets in the world

Key findings from the report include:

  • Between the countries analysed, over $15bn of equity is released per year for homeowners, but by 2031, the global equity release market is expected to exceed $50bn in annual releases.
  • The most common sources of financing for equity release mortgages are banks and insurance companies, as well as securitisations.
  • The most common type of equity release is the lifetime mortgage, which is available in the majority of countries covered by the survey, followed by home reversion schemes.
  • Equity release products are typically available to customers from the age of 55 or 60 years old, with a mix of fixed and variable rates.
  • A lack of customer awareness is cited as the main barrier to growth, followed by insufficient funding, notably in European markets

 

Commenting on the survey findings, Steve Kyle, Secretary General of EPPARG, said:

“The survey report confirms that equity release providers across the globe are facing similar challenges and opportunities. As a global industry, we must now foster awareness of the considerable social and economic benefits that home equity release products can bring, particularly in the light of the global economic downturn triggered by the pandemic.”

“We also advocate a strong focus on standards, such as the EPPARG 10 standards which we have launched in Europe, to build confidence in this innovative product among both investors and consumers. It will be vital to grow the global market safely, working in close collaboration with regulators and governments, to demonstrate that equity release is a safe financial option for elderly homeowners seeking to supplement their income.”

Ben Grainger, UK Investment Advisory Co-Lead at EY, said:

“Equity release is an important element to a retiree’s financial affairs, and growth in the market will bring welcome competition and innovation. There is an element of chicken and egg to growth amid the various obstacles, but as investors increasingly recognise the potential of this market and growth does emerge, many of the current challenges will subside. Alongside market transformation and growth, it will be key that the advice providers fully align and move at the same pace to ensure that individual, tailored advice is given to users of equity release.”

Steve Irwin, President of the National Reverse Mortgage Lenders Association (NRMLA) of the USA said:

“Financial retirement risks for older homeowners are a global issue. As the survey indicates, the international market participants face similar challenges to product development and acceptance. It is also clear that there is a common understanding that the responsible use of home equity is a critically important option to help mitigate these potential retirement risks and help older homeowners stay financially secure.”

 

David Burrowes, Chairman of the UK Equity Release Council and EPPARG Board Member, said:

“This survey resonates with the Council’s 30 years’ experience and focus on supporting customer awareness and confidence by setting and evolving standards. It is timely that as the most mature market globally we are closely collaborating with our European friends to encourage the growth of the global equity release market alongside good consumer outcomes.”

Kevin Conlon, CEO of the Equity Release Industry Council (ERIC) of Australia said:

“The challenge of funding a dignified retirement is a global issue and the solution offered through equity release is often not well understood by those who would benefit most from accessing their housing wealth in this way. We congratulate EPPARG on the leadership role they have taken in ensuring a better informed market through the release of the 2020 Global Equity Release Roundtable survey report”.

The survey report is available at:

http://epparg.org/wp-content/uploads/2021/01/2020-Global-Equity-Release-Roundtable-Survey.pdf

The report is based on data collected from equity release market players in the following 13 countries: Australia, Canada, Germany, Italy, Ireland, the Netherlands, New Zealand, Norway, Poland, Spain, Sweden, the UK and the USA.

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