Advisers expect equity release sector to double

Many feel the equity release sector is yet to reach its full potential, with advisers predicting that a yearly total of £2.4bn is within grasp, double the year-end prediction of £1.2bn for 2014.

Advisers also expected more providers to enter the market in 2015, two new entrants on average, with more transparent early repayment charges top of the product feature wish list.

More than two-fifths (42%) of older homeowners enquiring about equity release have an outstanding mortgage, up from 36% in Q3.

The top three reasons for releasing equity remain unchanged from Q3 with debt consolidation by far and away the most common motivator (44%). The percentage of those accessing property wealth for home improvements has increased over the past three months and now occupies joint second spot with the increased cost of living (both 17%).

The percentage of clients advised against releasing equity in the last quarter fell to 5% (from 10% in Q3), suggesting more and more older homeowners have a genuine need to access their housing wealth.

#poll#

Geoff Charles, CEO of Bower Retirement Services, commented:

“Far from being complacent after such an encouraging year, the majority of advisers expect further growth, both in the coming months and longer term. With awareness of the benefits of equity release growing and inadequate pension savings and increasing costs of living continuing to bite, it is no surprise that the market looks set to continue its upward trajectory. Attitudes to inheritance have evolved to the point where older homeowners no longer feel compelled to leave every single penny to their children. They are now much happier to utilise their housing wealth with a view that leaving an inheritance would be nice but not essential.

“This isn’t to say that equity release will be suitable in all circumstances and our latest figures show that our advisers recommended that an average of two clients each in the last quarter pursue other options. Many of these either had existing savings or no pressing need to release funds. This highlights the importance of ensuring that advisers continue to act in their clients’ best interests as the sector grows.

“Judging by our research, such integrity shouldn’t be a problem with many of our advisers saying they were motivated to become equity release advisers in the first place by a genuine desire to help older homeowners make important financial decisions. We pride ourselves on being an honest and transparent organisation and our advisers share the same commitment and integrity.”