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Equity Release Schemes - UK - May 2018

OVERVIEW
What you need to know
Products covered in this Report
Equity Release Council
EXECUTIVE SUMMARY
The market
Equity release lending up by 42%
Figure 1: Forecast value of new equity release schemes sold, 2012-22
Companies and brands
Legal & General leads a heavily congested market
Figure 2: Equity release market share, by value of new sales, 2016 and 2017
Total above-the-line expenditure increased 84% in 2017
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
Figure 4: Expected/actual sources of retirement income, 2017 and 2018
Mortgages are the most common form of debt
Figure 5: Current outstanding debts, February 2018
Consumers are generally confident they’ll get by in retirement
Figure 6: Financial situation at retirement age, February 2018
Up to 10% would consider equity release
Figure 7: Consideration of equity release schemes, 2016-18
Consumers need more help in finding equity release advice
Figure 8: Attitudes towards equity release, February 2018
What we think
ISSUES AND INSIGHTS
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
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
Equity release lending up by 42%
Figure 9: Sales of equity release products, by volume and value, 2011-17
Growth will continue to be positive over the next five years
Figure 10: Forecast value of new equity release schemes sold, 2012-22
Figure 11: Forecast volume of new equity release schemes sold, 2012-22
Figure 12: Forecast value and volume of new equity release schemes sold, 2017-22
Forecast methodology
MARKET SEGMENTATION
53% of growth in the second half of 2017
Figure 13: Volume of equity release customers compared, H1 2017 and H2 2017
Drawdown accounts for 70% of new customer plans…
Figure 14: Proportional distribution of new equity release sales, by product type, 2012-17
…and attracts an older customer base
Figure 15: Average age of new customers, by plan type and half years, H1 2014-H2 2017
MARKET DRIVERS
Average house prices up by 3% from 2017
Figure 16: Average house prices in the UK, by country, January 2005-January 2018
Home ownership has fallen, particularly among under-55s
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
Figure 18: Personal borrowing rates tracker, January 2016-January 2018
£300 million made available for Ageing Society Grand Challenge
REGULATORY AND LEGISLATIVE CHANGES
FCA makes changes to lifetime product rules…
…and modifies Standards for Appropriate Examinations
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
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
A heavily congested market
Figure 19: Equity release market share, by value of new sales, 2016 and 2017
Legal & General was the biggest lender in 2017
Figure 20: Top four equity release providers, by value of new sales, 2013-17
COMPETITIVE STRATEGIES
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
Adspend increased by 84% in 2017
Figure 21: Total above-the-line, online display and direct mail advertising expenditure on equity release, 2013-17
Age Partnership is the biggest spender
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
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
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
Just 2% use or expect to use equity release
Private pensions lag behind state provisions
Figure 24: Expected/actual sources of retirement income, 2017 and 2018
75% use or plan to use two or more sources of retirement income
Figure 25: Repertoire of expected/actual sources of income, February 2018
DEBT LEVELS AT RETIREMENT
Mortgages are the most common form of debt
Almost two out of three people have no outstanding debt
Figure 26: Current outstanding debts, February 2018
Retirees are less likely to have outstanding debt
Figure 27: Current outstanding debts, by working status, February 2018
FINANCIAL CONFIDENCE AT PENSION AGE
Consumers are generally confident they’ll get by in retirement
Figure 28: Financial situation at retirement age, February 2018
Private pension contributions are key to financial confidence…
Figure 29: Financial health at retirement, by product used to fund retirement, February 2018
…as is home ownership
CONSIDERATION OF EQUITY RELEASE 
Up to 10% would consider equity release
Figure 30: Consideration of equity release schemes, 2016-18
Hard-pressed consumers still reluctant to consider equity release
Figure 31: People who might consider equity release to fund retirement, by ACORN group, February 2018
ATTITUDES TOWARDS EQUITY RELEASE 
Consumers need more help in finding equity release advice
29% agree equity release is a good way to help children financially
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
Figure 33: Attitudes towards equity release, people who answered yes, by age group, February 2018
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Additional best-case/worst-case forecast tables
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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