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Equity Release Schemes - UK - May 2017

“Lenders have attempted to ‘normalise’ equity release by introducing measures to offer homeowners more flexibility and more competitive interest rates on lifetime mortgages.
The substantial growth seen in the market suggests this is working but with this will come increased scrutiny from regulators and the media, meaning providers must continue to work hard on restoring the industry’s reputation.”
– Paul Davies, Senior Financial Services Analyst

This Report discusses the following key topics:

  • The expectation of inheritance is dying out
  • Peer power

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Table of contents

  1. Overview

    • What you need to know
      • Scope of this Report
        • Equity Release Council
        • Executive Summary

            • The market
              • Equity release sales grew by a third in 2016
                • Figure 1: Sales of equity release products, by volume and value, 2011-16
              • Maturity of interest-only mortgages will help equity release sales to kick on
                • Figure 2: Forecast value of new equity release schemes sold, 2011-21
              • Companies and brands
                • Big three lenders control 85% of the market
                  • Figure 3: Equity release market share, by value of new sales, 2015 and 2016
                • The consumer
                  • One in 10 over-45s expect to downsize
                    • Figure 4: Expected/actual sources of retirement income, February 2017
                  • Nearly a quarter of 60-64-year-olds still paying off mortgage
                    • Figure 5: Current outstanding debts, February 2017
                  • Around one in seven weighing up equity release schemes
                    • Figure 6: Consideration of equity release schemes, February 2015-February 2017
                  • Education can help to broaden appeal
                    • Figure 7: Attitudes towards equity release, February 2017
                  • What we think
                  • Issues and Insights

                    • The expectation of inheritance is dying out
                      • The facts
                        • The implications
                          • Peer power
                            • The facts
                              • The implications
                              • The Market – What You Need to Know

                                • Equity release sales grew by a third in 2016
                                  • Mortgage repayments push up plan values
                                    • Equity release buoyed by strong housing market
                                      • 40,000 interest-only mortgages maturing each year
                                        • The pension gaps
                                        • Market Size and Forecast

                                          • Equity release sales grew by a third in 2016
                                            • Figure 8: Sales of equity release products, by volume and value, 2011-16
                                          • Market forecast
                                            • Maturity of interest-only mortgages will help equity release sales to kick on
                                              • Brexit uncertainty contributing to house price slowdown
                                                • Figure 9: Forecast value of new equity release schemes sold, 2011-21
                                                • Figure 10: Forecast volume of new equity release schemes sold, 2011-21
                                                • Figure 11: Forecast value and volume of new equity release schemes sold, 2016-21
                                              • Forecast methodology
                                              • Market Segmentation

                                                • Two in three plans are drawdown
                                                    • Figure 12: Proportional distribution of new equity release sales, by product type, 2012-16
                                                  • Mortgage repayments push up plan values
                                                    • Figure 13: Average amount released, by product type, H1 2015-H2 2016
                                                • Market Drivers

                                                  • Equity release buoyed by strong housing market…
                                                    • Figure 14: Average house prices in the UK, January 2005-January 2017
                                                  • …but growth may have peaked
                                                    • Number of over-45s renting has soared in the past five years
                                                      • Figure 15: Housing tenure, by age of household reference person, England data 2010/11 and 2015/16
                                                    • 40,000 interest-only mortgages maturing each year
                                                      • The pension gaps
                                                          • Figure 16: Consumer agreement with statements regarding their pension, June 2016
                                                        • Equity release used to enjoy retirement as well as to service debt
                                                            • Figure 17: Reason for choosing equity release, 2011 and 2016
                                                          • Boundaries between equity release and mortgages becoming more blurred
                                                          • Companies and Brands – What You Need to Know

                                                            • Big three lenders control 85% of the market
                                                              • Brokers bolster advice services
                                                                • JRP Group rolls out new trading brand
                                                                  • Providers look to carve out a niche
                                                                  • Market Share

                                                                    • Big three lenders control 85% of the market
                                                                        • Figure 18: Equity release market share, by value of new sales, 2015 and 2016
                                                                      • Legal & General sales tripled in 2016
                                                                          • Figure 19: Top four equity release providers, by value of new sales, 2013-16
                                                                      • Competitive Strategies

                                                                        • Strong preference for face-to-face advice
                                                                          • Figure 20: Preferred sources of retirement income advice, February 2017
                                                                        • Brokers bolster advice services
                                                                          • JRP Group rolls out new trading brand
                                                                            • Legal & General lands with a bang
                                                                              • Room for more?
                                                                                • Providers look to carve out a niche
                                                                                  • Family affairs
                                                                                  • Advertising and Marketing Activity

                                                                                    • Total above-the-line expenditure rose by 80% in 2016
                                                                                      • Figure 21: Above-the-line, online display and direct mail advertising expenditure on equity release, 2012-16
                                                                                    • Leading brokers’ ATL spend doubled in 2016
                                                                                      • Figure 22: Above-the-line, online display and direct mail advertising expenditure on equity release, by advertiser, 2015 and 2016
                                                                                    • TV accounts for nearly half of ATL expenditure
                                                                                      • Figure 23: Above-the-line, online display and direct mail advertising expenditure on equity release, by media type, 2016
                                                                                  • The Consumer – What You Need to Know

                                                                                    • One in 10 over-45s expect to downsize
                                                                                      • Nearly one in three over-45s still paying off mortgage
                                                                                        • Around one in seven weighing up equity release schemes
                                                                                          • Education can help to broaden appeal
                                                                                            • Peer power
                                                                                            • Sources of Retirement Income

                                                                                              • One in 10 consumers expect to downsize
                                                                                                  • Figure 24: Expected/actual sources of retirement income, February 2017
                                                                                                • One in 20 home buyers to use equity release to fund retirement
                                                                                                  • Figure 25: Expected/actual sources of retirement income, by housing tenure, February 2017
                                                                                                • Aggregation could offer more transparency
                                                                                                    • Figure 26: Repertoire of expected/actual sources of retirement income, February 2017
                                                                                                • Debt Levels at Retirement

                                                                                                  • Nearly one in three over-45s are still paying off mortgage
                                                                                                    • Figure 27: Current outstanding debts, February 2017
                                                                                                  • Majority of homeowners are debt-free
                                                                                                      • Figure 28: Current outstanding debts, by housing tenure, February 2017
                                                                                                    • Only a quarter of people in largest households are debt-free
                                                                                                      • Figure 29: Current outstanding debts, by number of people living in household, February 2017
                                                                                                  • Financial Health in Retirement

                                                                                                    • 30% of over-45s feeling cautious or concerned
                                                                                                        • Figure 30: Financial health in retirement, February 2017
                                                                                                      • The next generation of retirees expect to be less comfortable
                                                                                                        • Figure 31: Financial health in retirement, by working status, February 2017
                                                                                                      • Thinking about life after death
                                                                                                        • Figure 32: Financial health in retirement, by marital status, February 2017
                                                                                                    • Consideration of Equity Release

                                                                                                      • Around one in seven weighing up equity release schemes
                                                                                                          • Figure 33: Consideration of equity release schemes, February 2015-February 2017
                                                                                                        • Mortgage owners more open to releasing equity
                                                                                                          • Figure 34: Consideration of equity release schemes, February 2017
                                                                                                      • Attitudes towards Equity Release

                                                                                                        • Education can help to broaden appeal
                                                                                                            • Figure 35: Attitudes towards equity release, February 2017
                                                                                                          • Expectation of inheritance is dying out
                                                                                                          • Sources of Retirement Income Advice

                                                                                                            • Peer power
                                                                                                              • Figure 36: Preferred sources of retirement income advice, February 2017
                                                                                                            • Equity release audience not shut off to technology
                                                                                                              • Figure 37: Preferred sources of retirement income advice, by consideration of equity release, February 2017
                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                              • Abbreviations
                                                                                                                • Consumer research methodology
                                                                                                                • Appendix – Market Size and Forecast

                                                                                                                  • Additional best-case/worst-case forecast tables
                                                                                                                    • Figure 38: Best- and worst-case forecast for the value of new equity release schemes sold, 2016-21
                                                                                                                    • Figure 39: Best- and worst-case forecast for the volume of new equity release schemes sold, 2016-21
                                                                                                                  • Forecast methodology

                                                                                                                  Companies Covered

                                                                                                                  To learn more about the companies covered in this report please contact us.

                                                                                                                  Equity Release Schemes - UK - May 2017

                                                                                                                  US $2,583.33 (Excl.Tax)