Five Reasons Why Equity Release Has a Bright Future
According to Safe Home Income Plans’ (SHIP) fifth annual members’ survey, the equity release market faces a bright future. There are five key factors that contribute to this.
A Growing Role for Equity Release
The growing numbers of retirees balanced against a gaping pension deficit is forcing many homeowners to look at alternatives to help fund retirement. The positive performance of the equity release market in the fourth quarter of 2009 suggests that more people are once again considering such schemes with confidence.
More Products to Fulfill Homeowners’ Needs
Choice is a valuable tool in the equity release market because each homeowner will have different needs and preferences. It is therefore encouraging that the potential for more products – perhaps aided by more entrants into the market – will increase. In fact 40% of the member’s asked in SHIP’s survey believe that new entrants will arrive in 2010.
Greater Regulation Leading to Greater Trust
Regulation in the equity release market is far more stringent than in previous years, which is helping return trust to the market. 21% of the members questioned in SHIP’s survey felt that these tighter regulations were helping customers to get the right advice and professional service needed. In fact 40% of equity release customers are now taking more than six months researching products before making a decision; aided by more advice and information available.
Awareness from the Government About the Role Equity Release Can Play
The issue of funding care for the elderly is one that won’t go away, especially as we are an ageing population. This has led to calls for equity release to gain recognition as a reputable source to fund care. The fact that there is over £700 billion in housing equity has led to the Conservatives to incorporate equity release into their funding for retirement inquiry.
A Strong Code of Conduct
SHIP’s code of conduct continues to be a key factor for the equity release market. A third of member’s asked believed that the strength in this code of conduct will help the equity release market going into the future.
Andrea Rozario, director general of Ship, said: “The equity release industry has developed considerably over the years and has strong safeguards in place to protect consumers and intermediaries.
“There will be more than 18m over 55s in the UK by 2011 – many with insufficient retirement savings but significant housing equity – therefore it is vital that consumers have the confidence to speak to an expert about equity release rather than struggle to survive.
“On a more positive note, given lack of funding has been a serious issue for some of our members we are pleased to see that many providers feel additional funding will be achieved in 2010. With more and more institutions looking for solid long term investments, we hope that more will take a serious look at the benefits of equity release assets.
“We are also delighted to see that our members believe that 2010 will be the year when the government will become more involved.”
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