The European Pensions and Property Asset Release Group (EPPARG) and EY have published the Global Equity Release Roundtable 2023 survey report.
It forecasts that that the global equity release market could hit USD 50 billion by 2033, more than doubling its current size.
The report gathers data from market leaders across 13 countries globally with established or developing equity release markets, and analyses growth potential. The 13 countries span Europe, North America and Australia, and are considered to be amongst the largest equity release markets in the world.
Key findings from the report include:
- There is an increasing need for the product given the cost-of-living crisis and higher inflation.
- Among the countries analysed, over $17bn of equity is currently released each year for homeowners, but this is expected to increase dramatically by 2033, when the global equity release market is expected to reach $50bn in annual releases.
- Banks are the most common source of financing for equity release mortgages globally, followed by insurance companies, securitisations and debt.
- The most common type of equity release is the lifetime mortgage, which is available in the majority of countries covered by the survey, followed by home reversion schemes.
- Equity release products are typically available to customers from the age of 55 or 60 years old, with a mix of fixed and variable rates offered.
- The most popular product globally is the lump sum, with annuity and drawdown products available in a number of countries.
- The most significant factor cited as impacting equity release pricing is interest rates, followed by funding costs and availability.
- A lack of customer awareness is cited as the primary barrier to growth, followed by insufficient funding, notably in European markets.
Steve Kyle, secretary general of EPPARG, said: “We are very much encouraged by the results of our latest survey, which confirms that equity release has an increasing role to play at global level in allowing elderly homeowners to draw on their own home as an asset to finance a decent and comfortable retirement. We will be continuing to build awareness of equity release products internationally in view of the significant social and economic benefits that they bring. In Europe, I am pleased to say that we are seeing a number of new innovative start-ups entering the market, which is still nascent in some countries, with a range of business models designed to offer new financing options to elderly homeowners.”
“At EPPARG, we also advocate a clear focus on ensuring high standards, such as our own EPPARG 10 standards in Europe, for both lifetime mortgages and home reversion products. Our goal is to foster an enabling environment which will allow the global equity release market to reach its full potential, as a safe and attractive option for investors and elderly homeowners alike.”
David Burrowes, chairman of the UK Equity Release Council and EPPARG board member, added: “This survey resonates with the Council’s understanding that growth of the market and unlocking property wealth to support the growing needs of later life consumers’ needs greater customer awareness. Maintaining and increasing consumer confidence needs to be based on standards and innovation which support good consumer outcomes.
Steve Irwin, president of the National Reverse Mortgage Lenders Association (NRMLA) of the USA, said: “Housing wealth remains one of the greatest assets for the vast majority of the ever-increasing global population of older homeowners, and the ability to access that equity, under the right circumstances, is the key to enabling a more secure retirement. As this marketplace expands and matures, which is clearly anticipated by the marketplace study, it will be necessary for participants to ensure consumer protections and education remain as a solid foundation of the product offerings.”