Experts from Just Group, HUB Financial Solutions, and Key, comment on the Equity Release Council’s Spring 2022 Market Report
Stephen Lowe, group communications director at retirement specialist Just Group, said:
“We have seen a rebound in business levels as homeowners whose plans were knocked off course by the pandemic return to the market. The drivers for increased activity remain in place with house prices buoyant and a favourable interest rate environment to fix mortgage rates for the long term.
“While economic circumstances will inevitably change over time, the high levels of consumer protection mandated in the Equity Release Council’s product standards such as the no-negative equity guarantee and fixed or capped interest rates for life are important to maintaining and promoting consumer confidence.
“Innovation is continuing apace, such as medical underwriting which we have pioneered across our entire lifetime mortgage range, and is helping to deliver more tailored solutions at lower cost.
“Looking forward, we expect lifetime mortgages to become a cornerstone of retirement planning alongside pensions and other investments because they can be tailored to borrowers’ individual requirements.
“Equity release offers potential solutions to those homeowners who suffered a financial shock during the pandemic or find themselves struggling with the cost-of-living squeeze, but also can help with lump sums or for estate planning over the longer-term. The key message is that homeowners need high-quality advice to ensure their plan fits their unique needs and aspirations.”
Simon Gray, managing director at equity release advisory firm HUB Financial Solutions, said:
“We are seeing the market evolve with new products and options to better service homeowners considering releasing equity, and that is underlining the importance of well trained, knowledgeable advisers who take time to fully understand the borrowers’ requirements and tailor suitable solutions to meet their needs.
“Along with greater innovation and competition, the introduction of the ERC’s new product standard allowing penalty-free partial repayments reinforces the focus on high levels of consumer protection at the bedrock of the market.
“The market is returning to growth after the pandemic but the economic situation continues to change and people’s requirements and situations will evolve. It is a time when advisers can show the value of the profession to customers whether their goal is bolstering their income, estate planning, providing cash lump sums, or paying for care.”
Will Hale, CEO at later life finance specialists Key, said:
“Following a record year in 2021 for the equity release market, the Council’s Spring Report suggests that rising house prices are helping build on this growth to further support new and existing customers with “life-changing sums of money”.
“Indeed, the average amount that people released (£125,000) is equivalent to almost four years of a pensioner couple’s median post-tax income (£32,708) and seven years and seven months for a single pensioner (£16,588). At a time when very few are immune to the rising cost of living, this is particularly helpful for older people who may be on a fixed income or acting as a source of financial support for the wider family.
“Existing lifetime mortgage customers benefit too as their remaining equity increases in value in parallel to the overall house price. It is worth noting that customers on average are only releasing initial sums totalling around 30% of their property’s value – and the industry’s commitment to flexible and innovative products means customers have more choice on how to manage their property wealth with the support of expert advice. The recent introduction of the fifth product standard is clear evidence of this and the Council’s data suggests that over 125,000 penalty-free partial capital repayments were made by customers last year underlining how flexibility and innovation is delivering for customers.”