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The growth of equity release

The growth of equity release

Category: Retirement

Updated: 22/12/2014
First Published: 22/12/2014

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 It is now over 6 months old so the content may be out of date.

Equity release has enjoyed a surge of popularity in recent months, and it's on target for a record post-recession year. But, there are signs that it could expand even further, with an increasing number of retirees seeking to unlock some of the cash tied up in their homes.

A record year

2014 has been a record year for the equity release sector, with figures from the Equity Release Council reporting that lending had exceeded £1bn during the first nine months of the year – and it's on target to surpass a lending total of £1.2bn by the end of 2014.

But, a survey from Bower Retirement Services suggests that this is just the beginning. The majority of advisers feel that the sector hasn't yet reached its full potential, with many predicting that there's still significant capacity for growth. In fact, the latest Quarterly Adviser Tracker reveals that 70% of those surveyed expect the market to grow in the next six months – up from the 60% who thought the same in the previous quarter – with respondents predicting that a yearly total of £2.4bn could be possible in the future, double that seen in 2014.

It's a great time for the sector, with positivity really starting to take hold. Analysis suggests that this adviser confidence has been fuelled by the expectation of more equity release providers entering the market in 2015, and many advisers predict a particularly strong start to the year.

Spring is traditionally a "popular" time for equity release, the report noted, with many consumers looking to overhaul their finances for the new year. Others will have discussed their situation with friends and family over the festive period and will be seriously considering their options, while rising house prices mean there's the potential for more equity to be released than ever before.

What would you spend it on?

Let's say you took the plunge and chose to release some of the cash in your home. Just what would you spend it on? Well, the survey identified the most popular uses for equity release, and debt consolidation still comes out on top. Almost half (44%) of those releasing equity had this as their key motivator, while 17% chose to access property wealth for home improvements, the same percentage as those who used the cash to cover the rising cost of living.

"With awareness of the benefits of equity release growing, and inadequate pension savings and increasing costs of living continuing to bite, it is no surprise that the market looks set to continue its upward trajectory," said Geoff Charles, CEO of Bower Retirement Services. "Attitudes to inheritance have evolved to the point where older homeowners no longer feel compelled to leave every single penny to their children [and] are now much happier to utilise their housing wealth."

What next?

Find out more about equity release and whether it could be the solution you need by using our no-obligation planning service

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.