The equity release market is set for a year of growth, according to the latest membership survey from The Equity Release Council, which found that product innovation and increasing consumer awareness were the expected drivers for the growth.
45% of members predict that innovative products will make equity release more attractive to consumers during 2013. 38% also expect public understanding of equity release will grow this year, while the same number anticipate market growth.
The Council’s survey is the first to be carried out since the trade body’s relaunch in summer 2012, when membership was expanded to include advisers, solicitors, surveyors and charities. Among the wider membership, advisers are the most confident about 2013 bringing more product innovation (65%), better consumer understanding (50%) and market growth (45%).
The increasing appeal of equity release is closely linked to the financial challenges facing the UK population and the shifting landscape of retirement planning. With the cost of living rising and more people carrying debt into their later years, 62% of members – including 77% of provider members – see the ability of equity release to ‘fulfil a growing consumer need’ as its key strength, while 48% of all members cite ‘changing retirement needs’ as a vital factor.
With consumer confidence emerging as another important consideration for 2013, the majority of adviser members (75%) pinpoint the high level of product regulation to safeguard customers as the defining quality of equity release.
43% of all members feel consumer perception of equity release is more positive compared to the same time last year. Further improvements will rest on informed conversations around the subject of retirement planning, as well as tackling common misconceptions about equity release.
The survey identifies two key messages for the industry to communicate to consumers: firstly, that no-one can lose their home or owe more than its value through equity release (42%), and secondly, that people’s homes are often their largest asset and should form part of a holistic look at their financial planning for retirement (39%).
32% of adviser members also emphasised the facts that equity release advice is highly regulated; that products are much safer than ever before (32%); and that family members would rather see people use equity release than struggle financially in their retirement (32%).
Nigel Waterson, chairman of the Equity Release Council, said: “Our wider membership offers a valuable chance to consider a cross-section of opinions from all corners of the industry – from those who develop products to those responsible for advising consumers. Given that 2012 saw such positive growth in the market, the promise of further product innovation will build on this foundation and help establish equity release as a vital part of people’s retirement planning.
“As more people approach their later years with a question mark hanging over their finances, equity release offers many a common-sense and practical alternative to selling their homes or falling back on state support. The safeguards supported by The Council’s Code of Conduct and the work of our Standards Board are designed to protect consumers’ best interests, and mean that over-55s in 2013 can engage advisers with confidence to discuss how equity release can benefit their retirement.”