The equity release market has experienced spectacular growth in recent years, with the value of new business rising to nearly £4 billion in 2018. This has led to a steep rise in new product launches, and the entrance, or re-entrance, of bigger names like Nationwide and Standard life. Prospects for continued growth look favourable, with more and more homeowners set to enter retirement with insufficient pension savings, but a considerable amount of wealth tied up in their properties.
Nonetheless, in the grander scheme of things equity release continues to be a niche product, and near-term growth is being impacted by the recent slowdown in housing price growth caused by Brexit-related economic uncertainty. Despite the recent robust growth in sales, only a small minority of homeowners aged 45+ say they use, or plan to use it to fund their retirement, while the proportion who say they would be open to potentially considering it has fallen to a new low of 9%. What is more, equity release is still mostly viewed as an option of last resort - just over half agree that it should only be considered if someone does not have any other options.
This Report explores the key developments taking place in the equity release market, detailing the size of the market, including a five-year forecast, and the key factors influencing growth. The Report reveals the key players, their share of the market as well as recent activity. Mintel’s exclusive consumer research examines the current and prospective sources of retirement income, financial confidence in retirement, equity release product knowledge and perceptions, and the level of interest in using equity release as a funding option in retirement.
Products covered in this Report
For the purposes of this Report, Mintel has used the following definitions:
Equity release is a way of accessing the wealth tied up in a property without the need to move. With equity release, homeowners can either borrow against the value of their home (a lifetime mortgage) or sell all or part of it (using a home reversion plan) in return for a regular monthly income, a lump sum or the facility to get at equity as and when they like (drawdown) or a combination of these options.
As lifetime mortgages now account for more than 99% of equity release plans sold, the terms lifetime mortgage and equity release are used interchangeably throughout this Report.
To be eligible for equity release, homeowners must meet the following criteria:
Be aged 55 or over (or 60+ for home reversion plans); for joint plans the youngest borrower must be at least 55
Own their property outright, or in some instances, have a very small outstanding mortgage
The property must be in England, Scotland or Wales, and valued at more than £70,000.
Equity Release Council
The Equity Release Council (ERC) was established in 1991 and is the industry body for the equity release sector. The ERC represents the providers, qualified financial advisers and other intermediaries, lawyers and surveyors who work in the equity release sector. Although membership is voluntary, equity release providers who are members agree to follow Code of Conduct rules. The ERC represents around 95% of all equity release lending activity.
