Table of Contents
Executive Summary
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- The market
- Equity release sales have grown by more than 40% since 2011
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- Figure 1: Sales of equity release products, by volume, 2009-15
- The value of new sales is expected to rise by £1.2 billion to 2020
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- Figure 2: Forecast value of new equity release scheme sales, 2010-20
- Home improvements are the main reason behind equity release
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- Figure 3: Reason for choosing equity release, 2014-15
- Companies and brands
- Top four providers account for nearly 80% of sales
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- Figure 4: Equity release market share by value of new sales, 2015
- Above-the-line advertising spend declines as digital tools become key
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- Figure 5: Above-the-line, online display and direct mail advertising expenditure on equity release, 2011-15
- The consumer
- Using equity in the home is a small share of retirement income
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- Figure 6: Expected/actual income sources for retirement, March 2016
- 4 out of 10 over-45s have outstanding debts
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- Figure 7: Current outstanding debts, March 2016
- Only 14% of over-45s would consider equity release
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- Figure 8: Consideration of equity release schemes, March 2016
- The reputation of the equity release industry remains an issue
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- Figure 9: Attitudes towards equity release, March 2016
- What it means
Issues and Insights
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- Image and reputation continues to affect the equity release industry
- The facts
- The implications
- Debt levels amongst over-45s are expected to rise
- The facts
- The implications
- Referrals are becoming key to the sales process
- The facts
- The implications
The Market – What You Need to Know
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- The equity release market is forecast to grow by 39% by 2020
- More flexible products are leading the market
- Over-55s will grow to a population of 21 million adults by 2020
Market Size and Forecast
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- Equity release sales have grown by more than 40% since 2011
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- Figure 10: Sales of equity release products, by volume, 2009-15
- The value of new plans grown at a rapid pace over the last four years
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- Figure 11: Sales of equity release products, by volume and value, 2009-15
- Market forecast
- The value of new sales is expected to rise by £1.2 billion to 2020
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- Figure 12: Forecast value of new equity release scheme sales, 2010-20
- Figure 13: Forecast volume of new equity release schemes sold, 2010-20
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- Figure 14: Forecast value and volume of new equity release scheme sales, 2010-20
- Forecast methodology
Market Segmentation
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- Drawdown plans maintain the largest share of the market
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- Figure 15: Proportional distribution of new equity release sales, by product type, 2011-15
- Older consumers are more likely to use drawdown
- The value of equity release plans is increasing
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- Figure 16: Average amount released by product type, 2014-15
Market Drivers
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- The Baby Boomer approach to retirement provides a market opportunity
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- Figure 17: UK population by age group, 2014-34 (2014-based projections)
- 600,000 interest-only mortgage will mature before 2020
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- Figure 18: Housing tenure by age of household reference person, England data 2014/15
- A positive outlook for the housing market will increase equity release values
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- Figure 19: Mix adjusted house prices, 2000-15
- Retirement age changes are likely to increase equity release product innovation
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- Figure 20: Employment status, by gender and age, November 2015
- Home improvement is the main reason behind equity release
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- Figure 21: Reason for choosing equity release, 2014-15
Key Players – What You Need to Know
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- Smaller providers increased their market share during 2015
- Conduct rules are minimising product innovation
- Digital channels are becoming increasingly important for marketing
Market Share
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- Market share for larger providers has declined in 2015
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- Figure 22: Equity release market share by value of new sales, 2015
- Aviva maintains the value of sales but loses market share
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- Figure 23: Top four equity release providers by value of new sales, 2012-15
Competitive Strategies
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- Product introduction focus on flexibility in payments
- New providers are joining the market
- More detailed assessments of customer risk are in the pipeline
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- Figure 24: Equity release market sales through Key Retirement, by product type, 2015
- Platforms are being introduced to support the relationships with advisors
Advertising and Marketing Activity
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- Above-the-line advertising spend declines as providers diversify marketing tactics
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- Figure 25: Above-the-line, online display and direct mail advertising expenditure on equity release, 2011-15
- Brokers dominate above-the-line advertising for equity release
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- Figure 26: Above-the-line, online display and direct mail advertising expenditure on equity release, by advertiser, 2011-15
- Television adverts are being used to increase awareness
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- Figure 27: Percentage above-the-line, online display and direct mail advertising expenditure on equity release, by media type, 2011-15
- Nielsen coverage
The Consumer – What You Need to Know
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- 1 in 5 over-45s have only one source of retirement income
- Only 14% of over-45s would consider equity release as an option
- 17% agree that it makes sense to use home equity to fund retirement
Sources of Retirement Income
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- Using equity in the home is a small part of retirement income
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- Figure 28: Expected/actual income sources for retirement, March 2016
- 1 in 5 over-45s have only one source of retirement income
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- Figure 29: Expected/actual income sources for retirement, repertoire, March 2016
- 24% of home buyers aged 45+ expect to downsize to gain income
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- Figure 30: Expected/actual income sources for retirement, by housing tenure, March 2016
- Those aged 45-64 plan to use a broad range of retirement options
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- Figure 31: Expected/actual income sources for retirement, by age group, March 2016
Debt Levels at Retirement
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- 4 out of 10 over-45s have outstanding debts
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- Figure 32: Current outstanding debts, March 2016
- Less than 20% of those who own their own home have outstanding debts
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- Figure 33: Current outstanding debts, by housing tenure, March 2016
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- Figure 34: Current outstanding debts, by age group, March 2016
- Only 3% of over-45s expect to have significant debts at retirement
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- Figure 35: Expectations of debt at retirement, March 2016
Financial Health at Retirement
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- Nearly 9 out of 10 over-45s expect to have good finances at retirement
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- Figure 36: Financial situation at retirement, March 2016
- Women are more likely to have tight finances at retirement
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- Figure 37: Financial situation at retirement, by gender, March 2016
Consideration of Equity Release
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- Only 14% of over-45s would consider equity release
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- Figure 38: Consideration of equity release schemes, March 2016
- 1 in 5 over-45s still buying their home would consider equity release
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- Figure 39: Consideration of equity release schemes, by housing tenure, March 2016
- Those approaching retirement are more likely to consider equity release
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- Figure 40: Consideration of equity release schemes, by age group, March 2016
Attitudes towards Equity Release
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- The reputation of the equity release industry remains an issue
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- Figure 41: Attitudes towards equity release, March 2016
- Near-retirees worry less about inheritance than previous generations
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- Figure 42: Attitudes towards equity release, by age group, March 2016
- Those holding long-term credit are more likely to see equity release as a last option
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- Figure 43: Attitudes towards equity release, by type of debt held, March 2016
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Repertoire analysis
Appendix – Market Size and Forecast
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- Figure 44: Best and worst case forecast value of equity release scheme sales, 2010-20
- Figure 45: Best and worst case forecast volume of equity release scheme sales, 2010-20
- Forecast methodology
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