Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The market
- Equity release sales will continue growing
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- Figure 1: Forecast of new equity release sales, by volume, 2007-17
- Equity release sales on the rise
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- Figure 2: Volume of new equity release plan sales, by type, 2006-12
- Market factors
- The long-term future of equity release looks assured
- Dilnot’s ‘deferred payment scheme’ will challenge the equity release market
- Companies, brands and innovations
- The three big providers continue to dominate the marketplace
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- Figure 3: Equity release provider share, by new sales value, 2012
- Providers look to appeal to advisers
- Advertising expenditure increases
- The consumer
- Equity release yet to enter the mainstream
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- Figure 4: Expected sources of income in retirement, February 2013
- Consumers predict a comfortable retirement
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- Figure 5: Expectations of finances in retirement, February 2013
- Strong negative attitudes towards equity release
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- Figure 6: Reason for considering equity release schemes, February 2013
- Consumers have a strong desire to leave an inheritance behind and not borrow in retirement
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- Figure 7: Attitudes towards equity release schemes, February 2013
- What we think
Issues in the Market
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- Will retirees be able to afford a comfortable retirement in the future?
- How will the desire to leave an inheritance hold back equity release sales?
- Is downsizing an alternative to equity release?
- Can retiring Baby Boomers provide a boost to the market?
Trend Application
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- See your legacy
- A better standard of living
- Mintel Futures: Generation Next
Market Drivers
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- Key points
- The UK’s ageing population tipped to drive future demand for equity release
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- Figure 8: UK population, by age, 2010-35 (2010-based projections)
- People living longer, so retirement income will need to stretch further
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- Figure 9: Expectation of life at age 55, by gender – UK, 1981-2060
- Many consumers have made little provision for retirement
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- Figure 10: Consumers response to ‘I do not have a pension or any kind of retirement savings at all’, by age, December 2012
- Consumers are often carrying debt into retirement
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- Figure 11: Most popular types of credit held, by age, May 2012
- The majority of over-65s own their own property.
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- Figure 12: Tenure by household reference person aged 65 and over, local authorities in England and Wales, 2011
- House prices rose steadily up to the financial crisis
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- Figure 13: UK house prices, Q1 1970-Q3 2013
- Uncertainty in the future growth of house prices
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- Figure 14: Annual house price growth in the UK – comparison of four different sources, Q1 2007-Q3 2012
Regulatory Context
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- Key points
- The Dilnot Commission
- Cap on the costs of care
- Deferred payment scheme
- MMR will prohibit non-advised equity release sales
- The move from Safe Home Income Plans (SHIP) to the Equity Release Council (ERC)
SWOT Analysis
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- Figure 15: Equity release schemes, SWOT analysis, 2013
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Who’s Innovating?
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- Key points
- Tailoring for the adviser
- Equity release schemes forge link with Home Improvement Agencies
- More flexible products introduced
- Providers are cutting rates and fees
Market Size and Forecast
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- Key points
- Equity release sales grow for the first time since 2007
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- Figure 16: Volume and value of new equity release plan sales, 2005-12
- Value per sale on the increase
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- Figure 17: Value per plan sold, 2005-12
- Market forecast
- Gradual growth in equity release sales expected
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- Figure 18: Forecast of equity release sales, by volume, 2007-17
- Figure 19: Forecast of new equity release sales, by volume, 2007-17
- Figure 20: Forecast of new equity release sales, by value, 2007-17
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- Figure 21: Value sales for equity release schemes, 2007-17
- Forecast methodology
- Fan chart explanation
Market Segmentation
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- Key points
- Drawdown mortgages account for two thirds of sales
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- Figure 22: Value of new equity release sales, by product type, 2009-12
- Lifetime drawdown products are the most popular, increasing by 13% last year
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- Figure 23: Volume of new equity release sales, by product type, 2006-12
- Home reversion sales continue to fall
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- Figure 24: Volume of new equity release plan sales, by type, 2007-12
Usage Trends
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- Key points
- Over half of sales are to 65-74-year-olds
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- Figure 25: Distribution of equity release schemes, by age, 2012
- Home improvement the most common use for equity release
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- Figure 26: Uses of equity release products, 2009-12
- Helping family and friends
Market Share
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- Key points
- Top two providers hold over three quarters of the market
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- Figure 27: Top three equity release providers, by new sales value, 2010-12
Companies and Products
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- Aviva
- Just Retirement
- LV=
- Key Retirement Solutions
- Other Providers
- Stonehaven
- Hodge Lifetime
- Bridgewater Equity Release
- New Life Mortgages
Brand Communication and Promotion
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- Key points
- Advertising expenditure picks up
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- Figure 28: Total advertising expenditure on equity releases products, 2008/09-2012/13
- Aviva takes the lion’s share
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- Figure 29: Top 8 advertisers of equity releases schemes, 2010/11-2012/13
- Saga and Age UK show the biggest increases in advertising expenditure
- Adspend through direct mail increases
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- Figure 30: Adspend on equity releases schemes, by media type, 2010/11-2012/13
Channels to Market
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- Key points
- Intermediary channel rising and further growth is expected
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- Figure 31: Share of equity release sales (volume), by distribution channel, 2007-12
Sources of Income in Retirement
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- Key points
- Equity release yet to enter the mainstream
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- Figure 32: Expected and actual sources of income in retirement, February 2013,
- The MMR will mean that providers will have to win over consumers and advisers
- State pension provision claimed by almost all eligible respondents
- Consumers are more inclined to downsize than use an equity release scheme
Number of Sources of Income in Retirement
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- Key points
- Consumers are most likely to have two sources of retirement income
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- Figure 33: Number of sources of income in retirement, February 2013
- Consumers with multiple sources of retirement income are most likely to use property
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- Figure 34: Expected sources of income in retirement, by number of sources of retirement income, February 2013
Financial Expectations in Retirement
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- Key points
- The majority predict that they will enjoy a comfortable retirement
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- Figure 35: Expectations of income in retirement, February 2013
- More people working past the state retirement age
- One in five 45-54-year-olds haven’t thought about how they will finance retirement
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- Figure 36: Expectations of income in retirement, by age, February 2013
- 55-64-year-olds are the most concerned about their finances
Reasons for Considering Equity Release Schemes
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- Key points
- Paying for care and generating a retirement income are the top reasons to use equity release
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- Figure 37: Consideration of equity release schemes, February 2013
- Appetite for equity release is remarkably low
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- Figure 38: Consideration of equity release schemes, February 2013
- Socio-economic status is a factor in equity release use
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- Figure 39: Consideration of equity release, by socio-economic group, February 2013
Reasons for Not Considering Equity Release
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- Key points
- Consumers value leaving an inheritance for their family
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- Figure 40: Reasons for not using equity release schemes, February 2013
- Over a quarter would downsize if they needed money
- Stigma towards taking out a loan in retirement
- Emotional reasons hold consumers back from using equity release
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- Figure 41: Reasons for not considering equity release schemes, February 2013
- Persuading consumers to consider equity release
- 45-64-year-olds are more inclined to want to leave an inheritance
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- Figure 42: Attitudes towards equity release schemes, by age, February 2013
- Consumers who want to leave an inheritance are more likely to have other sources of income
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- Figure 43: Expected sources of income in retirement, by attitudes towards equity release schemes, February 2013
Appendix – Product Definitions and Market Background
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- Target market
- Lifetime mortgage
- Home reversion plan
- Tax implications
- Regulation
- Equity Release Council
Appendix – Market Segmentation
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- Figure 44: Volume of new equity release plan sales, by type, 2007-12
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Appendix – Market Forecast
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- Figure 45: Market forecast – best- and worst-case scenario, by volume, 2012-17
- Figure 46: Market forecast – best- and worst-case scenario, by value, 2012-17
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Appendix – Sources of Income in Retirement
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- Figure 47: Most popular expected sources of income in retirement, by demographics, February 2013
- Figure 48: Next most popular expected sources of income in retirement, by demographics, February 2013
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Appendix – Number of Sources of Income in Retirement
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- Figure 49: Number of sources of expected income in retirement, by demographics, February 2013
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Appendix – Financial Expectations in Retirement
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- Figure 50: Most popular expectations of finances in retirement, by demographics, February 2013
- Figure 51: Next most popular expectations of finances in retirement, by demographics, February 2013
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Appendix – Reasons for Considering Equity Release Schemes
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- Figure 52: Reasons for considering equity release schemes, by demographics, February 2013
- Figure 53: Further reasons for considering equity release schemes, by demographics, February 2013
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- Figure 54: Further reasons for considering equity release schemes, by demographics, February 2013
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Appendix – Reasons for Not Considering Equity Release Schemes
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- Figure 55: Reasons for not considering equity release schemes, by demographics, February 2013
- Figure 56: Further reasons for not considering equity release schemes, by demographics, February 2013
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