Surge in Equity Release at the End of 2016

Premier Equity Release
Premier Equity Release
23rd February 2017

The Equity Release market went from strength to strength in 2016, with the value of third-party introducers increasing by 71% on 2015. But what can we expect for the year ahead?

With the figures for January already looking healthy and much innovation anticipated over the course of the year, experts expect to see bumper values once again in this increasingly popular market.

The Value of Introducer Relationships

Research by a leading financial planning specialist found that last year, typical Equity Release customers referred by a third-party introducer raised an average of £100,600 from their properties. This compares to the £55,300 released by customers who approached advisers directly.

The reason for the high value of Equity Release referrals is the many affluent, often high-net worth customers with interest-only mortgages that are reaching maturity. They are being advised by wealth managers, accountants, solicitors and high-end estate agents to consider this increasingly attractive option.

A Breakthrough Year

The high average value of referrals saw 2016 become a breakthrough year for the industry, with Equity Release surpassing the £2billion mark for the first time. This has paved the way for expansion and is prompting a flurry of product innovation and new market entrants in 2017.

With the rise in the number of interest-only mortgages reaching maturity and the rollout of pension freedoms, advisers are now seeking to build on the momentum by offering more products, and at better rates, than ever before.

Major Players Entering the Market

Nationwide is one lender currently looking at how it can respond to increasing customer need for lending into retirement by entering the Equity Release market in a clear, safe and secure way. Its aim is to give older borrowers the flexibility to stay in their properties for longer while helping them make the most of their money at the same time.

Santander also gave the Equity Release market a vote of confidence last year, prompting other large lenders to recommend this type of Lifetime Mortgage. Although not offering Equity Release products itself, Santander is writing to its interest-only mortgage customers to tell them about the option. This has encouraged more banks to recommend equity release to their customers and is fuelling further growth in the sector.

Lower Rates Spark Switching Enquiries

In recent months, there has also been an increase in the number of existing Equity Release clients looking to switch their deal to a lower rate. According to research from one adviser, average rates are currently around 5.66%, representing a fall of almost 1% in the last three years. The number of plans available has nearly trebled in that time, leading to some lenders offering deals for as little as 4.3%.

If you have any questions about Equity Release, please get in touch with our expert advisers today.