When you read a headline which says, ‘Six out of 10 homeowners aged over 55 would never consider equity release’, you might well think that this is a sector and product that is still having difficult breaking into the consciousness of those who are the demographic for our sector.
But, let’s actually break down that figure some more. Back in February, we learnt that – in England alone – there are around 23 million dwellings and, of those, about 66% are owned. Which is approximately 15 million homeowners. Use the same statistics for the UK as a whole (approximately 27 million dwellings) and we are looking at close to 18 million homeowners.
Back in 2010 Statista carried out an analysist of homeowners, just in England again, and in terms of age demographic, it suggested that almost 56% of all homeowners were over 55 years old. Or, in number terms, that’s over eight million.
So, let’s work that back to the original headline which came from a business called Boon Brokers, and again in England alone, we would be looking at 3.2 million homeowners over the age of 55 who would consider equity release.
If that isn’t a market worth going after, then I’m not sure what is, and I suspect that were we to compare the attitudes of the over-55s from five/10/20 years ago to equity release, we would be a long way short of four out of 10 older homeowners considering equity release as an option.
There’s no denying that we have come a long way in a relatively short amount of time, and my view is that year-on-year, both the equity release market and the wider later life lending sector continues to make progress and seep into the UK homeowning collective consciousness.
The Boon research highlights a lack of understanding about what equity release is, what the difference between lifetime mortgages and home reversions are, and a number of respondents who have been put off by what it deems ‘horror stories’.
However, what I would first say, is why are we expecting consumers to know about lifetime mortgages or home reversions, or RIOs, or any other option they might have, before they’ve even developed a need for cash which might be solved by such products.
It is an absolute fundamental of our sector that if we try to sell products, we will get absolutely nowhere. Our industry is littered with half-baked attempts to focus on product cut-through, when what we should be doing is highlighting the fact we can help these homeowners access the money they need.
Now, ultimately, this might not ever reach the product stage, but what we shouldn’t be doing is even trying to sell these products.
You ask these clients whether they need money for renovations or retirement income, whether they need money to help a child onto the property ladder or to buy a new car, whether they need money to fund long-term care or to visit family overseas for a length of time, and you’re likely to be met with an answer in the affirmative. From that point, you can tell them how you can help them, and how an equity release plan or other later life lending product may be the most appropriate solution for them. You’ll begin the conversation, understand their needs and circumstances and take it from there.
You ask these clients if they want a lifetime mortgage, a home reversion plan, a RIO, and you’re likely to fall at the first hurdle, because a) they won’t know what these are, b) they may have pre-conceived ideas about them, and c) these two things will combine to ensure they come across as one of the ‘six out of 10’.
In a nutshell, we need to continue to educate and inform to keep the number of homeowners who will consider an equity release option going in the right direction. But ultimately, we have to continue moving away from product and focus on holistic advice that gets clients to a solution. All the better if they have previously considered it, but it’s not ultimately necessary for this to be the case, and good advisers will recognise that very early on, and continue to talk solutions not products.
Stuart Wilson is CEO at Air Group