What will 2019 bring for equity release?

Looking ahead to 2019, there is an even greater potential for the market to expand as we continue to meet the increasing demands of customers and create positive outcomes for older borrowers. Product innovation, greater flexibility and a more diverse range of funding promise to be at the heart of this.

In 2018, we saw the return of retirement interest-only mortgages to the retirement lending market. It’s likely that next year we will see an expansion of this market as more providers develop and launch these products as part of their proposition. Lenders are also likely to be considering how they can develop their existing products to compete with retirement interest-only mortgages .

The later life industry could benefit greatly from closing the gap between retirement interest-only mortgages and equity release mortgages, however, rather than keeping them siloed as they have been so far. Doing so will only provide the industry with greater opportunities, and may even lead to some lenders developing lifetime interest-only mortgages as way to meet the needs of borrowers looking for a higher loan-to value ratio on their mortgage.

With more than a quarter of the UK’s entire population projected to be over 65 within the next 50 years, the underlying factors that drive the growth behind the later life market are likely to remain constant for many years to come. Our own research earlier this year showed that the retirement lending market will surpass £142bn by 2027.

Whilst this growing debt cannot be attributed to any single factor, relatively low pension savings, increasing numbers of people needing to repay interest-only mortgages, the need to pay for care in later life, and an increasing trend towards helping loved ones onto the property ladder will have contributed to the rise and will continue to do so going into 2019.

However, the continued success of the equity release market and better customer outcomes also depend on advisers offering these products to their clients. With product options in the equity release sector more than doubling in two years, it is more vital than ever for advisers to stay abreast of the current trends and developments in the market to ensure they can offer advice on all the choices available to best suit their clients’ needs.

To continue this rapid pace of growth, we also need more advisers to take the necessary exams to be able to advise on equity release, or at the very least explore the themes of later life lending with their clients, so that they can pass on any leads to specialist firms to complete the advice recommendations if needed.

Finally, a key area for growth in 2019 will be sourcing a greater variety of funding for lenders. Organisations such as pension schemes and wealth management firms are beginning to look towards the equity release sector as they recognise the promise of a good return on investment. A more diverse range of funding will not only drive product innovation, but will also lead to increased competition and, ultimately, more choice for consumers over the next 12 months.

Whilst 2018 has seen the equity release market grow leaps and bounds, 2019 promises to see even greater development. Product innovation, flexibility and choice will be vital in meeting the borrowing needs of individuals as they look to sustain their lifestyle in later life. At more 2 life, we can’t wait to see what the future holds for the equity release sector!