New research from leading equity release lender, more2life, has today revealed that over three-quarters (78%) of advisers think more of their customers will look to equity release to support basic retirement needs over the next year.
More than half (59%) of advisers also think a greater number of their clients will enquire about equity release as a means to boost their retirement income over this period. While understanding of the potential uses of housing equity in retirement is growing, the impact of Covid-19 on pension pots, careers and incomes of thousands of older households across the UK is likely to be driving this interest.
40% of advisers report a drop in the number of cases:
Today’s figures come despite the fact that 40% of advisers reported a drop in the number of equity release cases they have advised on since the start of the crisis compared to the number they would usually advise on in pre-Covid conditions. However, just over one-third (36%) of advisers said they have supported more equity release cases since the onset of the crisis. Meanwhile, just over a quarter (26%) of advisers said they had seen no change in the number of equity release cases they have advised on since the pandemic began.
Uptick in use of equity release to gift
Interestingly, over half (53%) of advisers had witnessed more clients using equity release to help family members onto the property ladder over the past year, arguably due to the recent Stamp Duty holiday, while 34% had seen an increase in the proportion of clients using equity release to help relatives who were struggling financially. Less than a fifth (16%) of advisers said that clients were looking to support their children or grandchildren more generally when asked by more2life in 2020.
Furthermore, almost one-third (31%) of advisers said they have supported a greater number of clients wanting to take out equity release to repay their residential mortgage, while more than a quarter (27%) said more of their customers using equity release were doing so to refinance debt since the onset of Covid-19.
Dave Harris, CEO at more2life, comments: “The later life lending market is facing an interesting conundrum – we’ve worked hard to educate people on the role that housing equity can play in retirement, but we are also aware that, now more than ever, we need to encourage people to avoid knee-jerk reactions and make smart sustainable choices for both the long and short term.
“That almost 80% of advisers expect to see more customers looking to equity release to support basic needs in retirement during the next year is not surprising. We have told them that later life borrowing is a safe viable option and people have listened. What we need to do now as an industry is to ensure over-55s get high quality advice that helps them find the best solution for their specific needs – whether this involves an equity release mortgage or an alternative option.
“With a growing number of people turning to advisers for guidance on funding needs in retirement, the later life market must ensure that it continues to support advisers with the very best range of products and tools, so they are well-placed to support as many borrowers as possible throughout this turbulent time.”
Notes to Editors:
Findings are based on online research undertaken in May 2020 (350 participants) and May 2021 (237 participants) on UK-based advisers operating in the later life lending space and representing a range of firms of different sizes and models.
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