Advisers predict another record year for equity release

Key's figures show that retired homeowners released £3.6 billion in new property wealth last year, but would reach close to £4 billion when further advances and additional drawdown are taken into account.

Figures to be released later this month by the Equity Release Council are expected to show the market reaching the £4 billion mark in 2018, up from £3.06bn in 2017, making it the fifth record-breaking year in a row.

46% of advisers surveyed by Canada Life expect the market to be worth between £4.5bn and £6bn this year.

Key's research shows that plan sales rose by 21% last year to 47,081 and new lending increased by £586 million.

Alice Watson, head of marketing and communications at Canada Life Home Finance, said: “The equity release sector is thriving. Recent figures show that almost as much was lent in the first three quarters of 2018 as the whole of 2017. And this research into the views of UK advisers offers a real vote of confidence for the sector. It’s clear they expect consumer demand to continue to grow apace, aided by advisers and providers increasing education, demystifying the products and making them more widely accessible.

“While uncertainty over the global political and economic situation may continue to hold back the housing market, equity release will still be a sensible solution for many – especially those using it as part of a more holistic approach to retirement planning.”

Will Hale, CEO at Key, commented: “The equity release market recorded another strong year of growth in new lending taking it to £3.6 billion and has doubled in size in three years demonstrating how important it is to retirement planning. Once further advances and additional drawdown is included it is getting close to £4 billion.

“The growth in gifting highlights the intergenerational benefits of equity release for families with money being used to clear debts, fund university fees and pay for house deposits and weddings. Even the use of equity release to fund home and garden improvements has benefits for families as it helps people to ‘age-proof’ their home and preserve wealth for the family.

“Debt remains however a major issue for some retired people and substantial numbers are relying on equity release to clear credit cards and loans as well as paying off mortgages. Good specialist advice is key to ensuring that older homeowners receive the most benefit from their property wealth and use it in the most appropriate way for them and their families.”