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Rising demand for equity release – and more choice

Rising demand for equity release – and more choice

Category: Retirement

Updated: 15/03/2016
First Published: 14/03/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Downsizing may be a popular option for many older homeowners these days, but what if you don't want to leave your home in order to free up some cash? Well, that's where equity release can come in, and our latest research shows that the market is responding to increasing demand for this kind of solution with a wider range of products.

The research, which focused on the current offerings available in the equity release market, found that there are now 70 different lifetime mortgage deals available covering a wide range of options and loan-to-values (LTVs), an increase of 34% on the number of deals available last year and more than double the total number from three years ago (see the table below).

Not only that, but the data also shows that lifetime mortgages are increasingly available with higher loan-to-values (LTVs), with 38 such deals now offering LTVs at 50% or above (depending on the customer's age and/or health). The maximum LTV now available is as high as 55.5%, which offers plenty of scope for homeowners.

There has also been growth in the number of providers offering the option to make capital repayments, with five providers now offering this flexibility compared with just one provider two years ago.

Analysis suggests that this is due to the desire to circumvent the stricter affordability rules that followed the Mortgage Market Review (MMR), which have affected interest served lifetime mortgages. The option to pay off capital (typically 10% per annum) has become more widely available – the benefit being that there could be less to repay on death or sale of the property – and is expected to become a standard feature on equity release products before too long.

Mar-11 Mar-13 Mar-14 Mar-15 Mar-16
Number of deals at 50% LTV or above 9 13 15 21 38
Total number of lifetime equity release deals 47 33 41 52 70

Richard Eagling, editor of Investment Life & Pensions Moneyfacts, commented:

"One of the most impressive characteristics of the equity release market has been the extent to which innovation has enabled its products to evolve.

"Flexible options such as drawdown facilities and the ability to service debt, combined with the Equity Release Council's rigorous standards that govern the provision of advice and products, have transformed the equity release market and ensured that today's products are a world away from the offerings that tarnished the reputation of the sector in the 1980s.

"Our latest research suggests that the equity release market is responding to growing demand and with new funders set to enter the sector this year, we expect the range of equity release solutions to continue to increase."

What next?

Find out more about equity release and see if it could be a way to unlock some of the cash tied up in your home

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.