Equity release choice remains higher than pre-pandemic

Equity release product choice remains higher than pre-pandemic, with a wider range of product features available, according to new analysis from Air.

While the October mini-budget saw a decrease in the number of equity release plans on the market from 582 to 317, product numbers remain above pre-pandemic numbers of 314 in 2019.

They are also substantially above those recorded just four years ago (144 plans) and a world away from the choice on the market ten years ago (17 plans).

Core product features have also increased over the last four years. The ability to make ad hoc interest payments within lenders' criteria without incurring an early repayment charge is now the fifth Equity Release Council product standard and available across all new eligible products. The number of plans that allow ongoing payments to manage the roll up of interest has also increased from 22 in 2018 to 190.

The availability of features such as inheritance protection (+29 to 92) and downsizing protection (+120 to 193) has also grown over this period.

While variable or gilt-linked early repayment charges have been a feature of the market since inception, the surety of fixed ERCs have gained prominence, rising from being available on 80 products in October 2018 to 200 by October 2022.

Stuart Wilson, CEO of Air, said: “While there is no doubt that the mini-budget saw lenders in the equity release market, as with other residential markets, pause for breath, the number of plans is higher than pre-pandemic and customers have access to a wider range of features than ever before.

“In the current uncertain environment, being able to find a customer the right fit for their individual circumstances is even more vital as, while people still need to use their housing equity, they are being naturally cautious around making decisions. Being able to explain that there is downsizing protection and the ability to guarantee an inheritance, in addition to a fixed rate for life and safeguards like the no-negative equity guarantee, should provide both customers and advisers with confidence.

“Advisers need to focus on getting the basics right as there is no question that with rising residential mortgage rates, pensions being squeezed and families looking for support that over-55s need to consider all their options and make choices that work for them now and in the future.”