Recovery in the equity release market - Optimistic but cautious.

25th September 2023

The recent increases in interest rates have had a significant impact on everyone’s financial situation; the cost-of-living crisis, financial planning and the inability to save, to name but a few. Needless to say, the equity release market has also suffered an impact, yet has been affected in an unexpected way.

Essentially the number of new equity release customers decreased in the last year, yet this year the number of active customers in Q2 rose 2% from the previous quarter with June seeing the highest point of the year so far.

Interestingly, many new customers are choosing drawdown lifetime mortgages rather than a single lump sum. A drawdown lifetime mortgage allows them to only take what they need in the short-term with the option of making extra withdrawals in the future as required. This helps them limit the effect of compound interest being added to their loan by only taking what they need for now. Supporting this, the ability to make optional repayments also keeps the compound interest down making equity release products more attractive to potential customers concerned about repaying the loan.

The gap between the rates of residential and lifetime mortgages has continued to narrow due to several socio-economic factors; people are living longer, their retirement savings remain insufficient to fund their later life needs, the desire to help their loved ones or simply give themselves a good quality of life. These factors remain influential reasons for choosing a lifetime mortgage.

The flexibility provided by the wealth of innovative new products now available on the equity release market are proving crucial in helping UK homeowners aged 55+ to meet their financial needs and help them avoid a later life financial crisis. Affordability tests for capital repayment or interest only mortgage or loan options, along with among other factors, are making it difficult for later life borrowers to access the funds they need to live the retirement they would like. This is where equity release products are presenting them with a real option to meeting their financial needs should they fit the required criteria and if it is advised to be the best option for them.

As always, seeking professional advice from an experienced equity release specialist is vital in order to help customers to fully understand the options available to them. Kevin Woods has been working in the financial industry for over 25 years, specialising in equity release since 2012. He is able to offer a free consultation without commitment of any kind should you wish to consider how equity release could be of benefit to you.

The market is looking cautiously optimistic and is maintaining a strength of presence that is providing a real financial solution to later life customers in need of financial support. The economic climate may shake us but it won’t break us – there is still a lot to look forward to so watch this space.

Source: 31 July 2023, Equity Release Council: Q2 2023 equity release market statistics.

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Equity release could be the answer to some of your financial questions. If you would like to know more about it, and see if it could be the right option for you, please book an appointment or request a call-back

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Equity release will reduce the value of your estate and may also affect your entitlement to means-tested benefits. You should always think carefully before securing a loan against your home.

Unless you decide to go ahead with a plan, our service is completely free of charge, as our fixed advice fee of £1,695 is only payable on completion of a plan.

A lifetime mortgage is the most popular form of equity release, and is a loan secured against your home that’s typically repaid when you pass away or go into long-term care.