Table of Contents
Overview
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- What you need to know
- Products covered in this Report
- Equity Release Council
Executive Summary
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- The market
- Equity release lending up by 42%
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- Figure 1: Forecast value of new equity release schemes sold, 2012-22
- Companies and brands
- Legal & General leads a heavily congested market
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- Figure 2: Equity release market share, by value of new sales, 2016 and 2017
- Total above-the-line expenditure increased 84% in 2017
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- Figure 3: Total above-the-line, online display and direct mail advertising expenditure on equity release, 2013-17
- The consumer
- Just 2% use or expect to use equity release
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- Figure 4: Expected/actual sources of retirement income, 2017 and 2018
- Mortgages are the most common form of debt
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- Figure 5: Current outstanding debts, February 2018
- Consumers are generally confident they’ll get by in retirement
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- Figure 6: Financial situation at retirement age, February 2018
- Up to 10% would consider equity release
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- Figure 7: Consideration of equity release schemes, 2016-18
- Consumers need more help in finding equity release advice
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- Figure 8: Attitudes towards equity release, February 2018
- What we think
Issues and Insights
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- Rising house prices: a short-term boost but long-term problem?
- The facts
- The implications
- Equity release can plug the retirement savings gap
- The facts
- The implications
- Equity release industry is booming but perceptions need to change
- The facts
- The implications
The Market – What You Need to Know
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- Equity release lending up by 42%
- Drawdown accounts for 70% of new customer plans
- Average house prices up by 3% from 2017
Market Size and Forecast
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- Equity release lending up by 42%
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- Figure 9: Sales of equity release products, by volume and value, 2011-17
- Growth will continue to be positive over the next five years
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- Figure 10: Forecast value of new equity release schemes sold, 2012-22
- Figure 11: Forecast volume of new equity release schemes sold, 2012-22
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- Figure 12: Forecast value and volume of new equity release schemes sold, 2017-22
- Forecast methodology
Market Segmentation
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- 53% of growth in the second half of 2017
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- Figure 13: Volume of equity release customers compared, H1 2017 and H2 2017
- Drawdown accounts for 70% of new customer plans…
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- Figure 14: Proportional distribution of new equity release sales, by product type, 2012-17
- …and attracts an older customer base
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- Figure 15: Average age of new customers, by plan type and half years, H1 2014-H2 2017
Market Drivers
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- Average house prices up by 3% from 2017
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- Figure 16: Average house prices in the UK, by country, January 2005-January 2018
- Home ownership has fallen, particularly among under-55s
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- Figure 17: Housing tenure, by age of household reference person, England data 2008/09 and 2016/17
- Interest-only mortgages present an opportunity for lenders
- Average equity release rate drops 17% since 2016
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- Figure 18: Personal borrowing rates tracker, January 2016-January 2018
- £300 million made available for Ageing Society Grand Challenge
Regulatory and Legislative Changes
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- FCA makes changes to lifetime product rules…
- …and modifies Standards for Appropriate Examinations
Companies and Brands – What You Need to Know
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- Legal & General leads a heavily congested market
- Greater interest prompts a spate of new products
- Total above-the-line adspend increased by 84% in 2017
Market Share
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- A heavily congested market
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- Figure 19: Equity release market share, by value of new sales, 2016 and 2017
- Legal & General was the biggest lender in 2017
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- Figure 20: Top four equity release providers, by value of new sales, 2013-17
Competitive Strategies
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- Legal & General prolongs Property Refurbishments Lifetime Mortgage pilot
- Nationwide is the new kid on the block
- more 2 life launches Maximum Choice equity release product
- SunLife and Age Partnership join forces to launch a new equity release product
Advertising and Marketing Activity
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- Adspend increased by 84% in 2017
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- Figure 21: Total above-the-line, online display and direct mail advertising expenditure on equity release, 2013-17
- Age Partnership is the biggest spender
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- Figure 22: Above-the-line, online and direct mail advertising expenditure on equity release, by advertiser, 2015-17
- Legal & General makes some noise
- Too much TV can be bad for your health
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- Figure 23: Above-the-line, online display and direct mail advertising expenditure on equity release, by media type, 2017
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Just 2% use or expect to use equity release
- Mortgages are the most common form of debt
- Consumers are generally confident they’ll get by in retirement
- Up to 10% would consider equity release
- Consumers need more help in finding equity release advice
Sources of Retirement Income
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- Just 2% use or expect to use equity release
- Private pensions lag behind state provisions
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- Figure 24: Expected/actual sources of retirement income, 2017 and 2018
- 75% use or plan to use two or more sources of retirement income
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- Figure 25: Repertoire of expected/actual sources of income, February 2018
Debt Levels at Retirement
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- Mortgages are the most common form of debt
- Almost two out of three people have no outstanding debt
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- Figure 26: Current outstanding debts, February 2018
- Retirees are less likely to have outstanding debt
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- Figure 27: Current outstanding debts, by working status, February 2018
Financial Confidence at Pension Age
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- Consumers are generally confident they’ll get by in retirement
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- Figure 28: Financial situation at retirement age, February 2018
- Private pension contributions are key to financial confidence…
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- Figure 29: Financial health at retirement, by product used to fund retirement, February 2018
- …as is home ownership
Consideration of Equity Release
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- Up to 10% would consider equity release
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- Figure 30: Consideration of equity release schemes, 2016-18
- Hard-pressed consumers still reluctant to consider equity release
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- Figure 31: People who might consider equity release to fund retirement, by ACORN group, February 2018
Attitudes towards Equity Release
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- Consumers need more help in finding equity release advice
- 29% agree equity release is a good way to help children financially
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- Figure 32: Attitudes towards equity release, February 2018
- Caring for future needs
- High street banks are well positioned to appeal to people aged 45-54
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- Figure 33: Attitudes towards equity release, people who answered yes, by age group, February 2018
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Additional best-case/worst-case forecast tables
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- Figure 34: Best- and worst-case forecast for the value of new equity release schemes sold, 2017-22
- Figure 35: Best- and worst-case forecast for the volume of new equity release schemes sold, 2017-22
- Forecast methodology
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