Sorry for interrupting, this website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Learn more
Accept & Close

Equity Release - UK - May 2013

“Regulation will provide challenges for the equity release market. However, there is cause for optimism, with demographic changes, a lack of pension provision and high levels of home ownership likely to guarantee the industry’s future.”

– Alexander Hiscox, Senior Financial Services Analyst

Some questions answered in this report include:

  • Will retirees be able to afford a comfortable retirement in the future?
  • How will the desire to leave an inheritance hold back equity release sales?
  • Is downsizing an alternative to equity release?
  • Can retiring Baby Boomers provide a boost to the market?

What you get

What's included

Why buy from us?

Succeed

Our reports will provide you with market data, consumer research and competitive intelligence to succeed in your market.

Instant Access

Buy now and you'll have instant access to the information you need to make the right decisions.

Opportunities

Find out what's next in the markets that matter to you: where opportunities lie and what challenges you will face.

Trusted

A business Superbrand, Mintel is a source you can trust. We have been defining and refining the Market Intelligence mix since 1972.

Table of contents

  1. Introduction

      • Abbreviations
      • Executive Summary

          • The market
            • Equity release sales will continue growing
              • Figure 1: Forecast of new equity release sales, by volume, 2007-17
            • Equity release sales on the rise
              • Figure 2: Volume of new equity release plan sales, by type, 2006-12
            • Market factors
              • The long-term future of equity release looks assured
                • Dilnot’s ‘deferred payment scheme’ will challenge the equity release market
                  • Companies, brands and innovations
                    • The three big providers continue to dominate the marketplace
                      • Figure 3: Equity release provider share, by new sales value, 2012
                    • Providers look to appeal to advisers
                      • Advertising expenditure increases
                        • The consumer
                          • Equity release yet to enter the mainstream
                            • Figure 4: Expected sources of income in retirement, February 2013
                          • Consumers predict a comfortable retirement
                            • Figure 5: Expectations of finances in retirement, February 2013
                          • Strong negative attitudes towards equity release
                            • Figure 6: Reason for considering equity release schemes, February 2013
                          • Consumers have a strong desire to leave an inheritance behind and not borrow in retirement
                            • Figure 7: Attitudes towards equity release schemes, February 2013
                          • What we think
                          • Issues in the Market

                              • Will retirees be able to afford a comfortable retirement in the future?
                                • How will the desire to leave an inheritance hold back equity release sales?
                                  • Is downsizing an alternative to equity release?
                                    • Can retiring Baby Boomers provide a boost to the market?
                                    • Trend Application

                                      • See your legacy
                                        • A better standard of living
                                          • Mintel Futures: Generation Next
                                          • Market Drivers

                                            • Key points
                                              • The UK’s ageing population tipped to drive future demand for equity release
                                                • Figure 8: UK population, by age, 2010-35 (2010-based projections)
                                              • People living longer, so retirement income will need to stretch further
                                                • Figure 9: Expectation of life at age 55, by gender – UK, 1981-2060
                                              • Many consumers have made little provision for retirement
                                                • Figure 10: Consumers response to ‘I do not have a pension or any kind of retirement savings at all’, by age, December 2012
                                              • Consumers are often carrying debt into retirement
                                                • Figure 11: Most popular types of credit held, by age, May 2012
                                              • The majority of over-65s own their own property.
                                                • Figure 12: Tenure by household reference person aged 65 and over, local authorities in England and Wales, 2011
                                              • House prices rose steadily up to the financial crisis
                                                • Figure 13: UK house prices, Q1 1970-Q3 2013
                                              • Uncertainty in the future growth of house prices
                                                • Figure 14: Annual house price growth in the UK – comparison of four different sources, Q1 2007-Q3 2012
                                            • Regulatory Context

                                              • Key points
                                                • The Dilnot Commission
                                                  • Cap on the costs of care
                                                    • Deferred payment scheme
                                                      • MMR will prohibit non-advised equity release sales
                                                        • The move from Safe Home Income Plans (SHIP) to the Equity Release Council (ERC)
                                                        • SWOT Analysis

                                                            • Figure 15: Equity release schemes, SWOT analysis, 2013
                                                        • Who’s Innovating?

                                                          • Key points
                                                            • Tailoring for the adviser
                                                              • Equity release schemes forge link with Home Improvement Agencies
                                                                • More flexible products introduced
                                                                  • Providers are cutting rates and fees
                                                                  • Market Size and Forecast

                                                                    • Key points
                                                                      • Equity release sales grow for the first time since 2007
                                                                        • Figure 16: Volume and value of new equity release plan sales, 2005-12
                                                                      • Value per sale on the increase
                                                                        • Figure 17: Value per plan sold, 2005-12
                                                                      • Market forecast
                                                                        • Gradual growth in equity release sales expected
                                                                          • Figure 18: Forecast of equity release sales, by volume, 2007-17
                                                                          • Figure 19: Forecast of new equity release sales, by volume, 2007-17
                                                                          • Figure 20: Forecast of new equity release sales, by value, 2007-17
                                                                          • Figure 21: Value sales for equity release schemes, 2007-17
                                                                        • Forecast methodology
                                                                          • Fan chart explanation
                                                                          • Market Segmentation

                                                                            • Key points
                                                                              • Drawdown mortgages account for two thirds of sales
                                                                                • Figure 22: Value of new equity release sales, by product type, 2009-12
                                                                              • Lifetime drawdown products are the most popular, increasing by 13% last year
                                                                                • Figure 23: Volume of new equity release sales, by product type, 2006-12
                                                                              • Home reversion sales continue to fall
                                                                                • Figure 24: Volume of new equity release plan sales, by type, 2007-12
                                                                            • Usage Trends

                                                                              • Key points
                                                                                • Over half of sales are to 65-74-year-olds
                                                                                  • Figure 25: Distribution of equity release schemes, by age, 2012
                                                                                • Home improvement the most common use for equity release
                                                                                  • Figure 26: Uses of equity release products, 2009-12
                                                                                • Helping family and friends
                                                                                • Market Share

                                                                                  • Key points
                                                                                    • Top two providers hold over three quarters of the market
                                                                                      • Figure 27: Top three equity release providers, by new sales value, 2010-12
                                                                                  • Companies and Products

                                                                                    • Aviva
                                                                                      • Just Retirement
                                                                                        • LV=
                                                                                          • Key Retirement Solutions
                                                                                            • Other Providers
                                                                                              • Stonehaven
                                                                                                • Hodge Lifetime
                                                                                                  • Bridgewater Equity Release
                                                                                                    • New Life Mortgages
                                                                                                    • Brand Communication and Promotion

                                                                                                      • Key points
                                                                                                        • Advertising expenditure picks up
                                                                                                          • Figure 28: Total advertising expenditure on equity releases products, 2008/09-2012/13
                                                                                                        • Aviva takes the lion’s share
                                                                                                          • Figure 29: Top 8 advertisers of equity releases schemes, 2010/11-2012/13
                                                                                                        • Saga and Age UK show the biggest increases in advertising expenditure
                                                                                                          • Adspend through direct mail increases
                                                                                                            • Figure 30: Adspend on equity releases schemes, by media type, 2010/11-2012/13
                                                                                                        • Channels to Market

                                                                                                          • Key points
                                                                                                            • Intermediary channel rising and further growth is expected
                                                                                                              • Figure 31: Share of equity release sales (volume), by distribution channel, 2007-12
                                                                                                          • Sources of Income in Retirement

                                                                                                            • Key points
                                                                                                              • Equity release yet to enter the mainstream
                                                                                                                • Figure 32: Expected and actual sources of income in retirement, February 2013,
                                                                                                              • The MMR will mean that providers will have to win over consumers and advisers
                                                                                                                • State pension provision claimed by almost all eligible respondents
                                                                                                                  • Consumers are more inclined to downsize than use an equity release scheme
                                                                                                                  • Number of Sources of Income in Retirement

                                                                                                                    • Key points
                                                                                                                      • Consumers are most likely to have two sources of retirement income
                                                                                                                        • Figure 33: Number of sources of income in retirement, February 2013
                                                                                                                      • Consumers with multiple sources of retirement income are most likely to use property
                                                                                                                        • Figure 34: Expected sources of income in retirement, by number of sources of retirement income, February 2013
                                                                                                                    • Financial Expectations in Retirement

                                                                                                                      • Key points
                                                                                                                        • The majority predict that they will enjoy a comfortable retirement
                                                                                                                          • Figure 35: Expectations of income in retirement, February 2013
                                                                                                                        • More people working past the state retirement age
                                                                                                                          • One in five 45-54-year-olds haven’t thought about how they will finance retirement
                                                                                                                            • Figure 36: Expectations of income in retirement, by age, February 2013
                                                                                                                          • 55-64-year-olds are the most concerned about their finances
                                                                                                                          • Reasons for Considering Equity Release Schemes

                                                                                                                            • Key points
                                                                                                                              • Paying for care and generating a retirement income are the top reasons to use equity release
                                                                                                                                • Figure 37: Consideration of equity release schemes, February 2013
                                                                                                                              • Appetite for equity release is remarkably low
                                                                                                                                • Figure 38: Consideration of equity release schemes, February 2013
                                                                                                                              • Socio-economic status is a factor in equity release use
                                                                                                                                • Figure 39: Consideration of equity release, by socio-economic group, February 2013
                                                                                                                            • Reasons for Not Considering Equity Release

                                                                                                                              • Key points
                                                                                                                                • Consumers value leaving an inheritance for their family
                                                                                                                                  • Figure 40: Reasons for not using equity release schemes, February 2013
                                                                                                                                • Over a quarter would downsize if they needed money
                                                                                                                                  • Stigma towards taking out a loan in retirement
                                                                                                                                    • Emotional reasons hold consumers back from using equity release
                                                                                                                                      • Figure 41: Reasons for not considering equity release schemes, February 2013
                                                                                                                                    • Persuading consumers to consider equity release
                                                                                                                                      • 45-64-year-olds are more inclined to want to leave an inheritance
                                                                                                                                        • Figure 42: Attitudes towards equity release schemes, by age, February 2013
                                                                                                                                      • Consumers who want to leave an inheritance are more likely to have other sources of income
                                                                                                                                        • Figure 43: Expected sources of income in retirement, by attitudes towards equity release schemes, February 2013
                                                                                                                                    • Appendix – Product Definitions and Market Background

                                                                                                                                        • Target market
                                                                                                                                          • Lifetime mortgage
                                                                                                                                            • Home reversion plan
                                                                                                                                              • Tax implications
                                                                                                                                                • Regulation
                                                                                                                                                  • Equity Release Council
                                                                                                                                                  • Appendix – Market Segmentation

                                                                                                                                                      • Figure 44: Volume of new equity release plan sales, by type, 2007-12
                                                                                                                                                  • Appendix – Market Forecast

                                                                                                                                                      • Figure 45: Market forecast – best- and worst-case scenario, by volume, 2012-17
                                                                                                                                                      • Figure 46: Market forecast – best- and worst-case scenario, by value, 2012-17
                                                                                                                                                  • Appendix – Sources of Income in Retirement

                                                                                                                                                      • Figure 47: Most popular expected sources of income in retirement, by demographics, February 2013
                                                                                                                                                      • Figure 48: Next most popular expected sources of income in retirement, by demographics, February 2013
                                                                                                                                                  • Appendix – Number of Sources of Income in Retirement

                                                                                                                                                      • Figure 49: Number of sources of expected income in retirement, by demographics, February 2013
                                                                                                                                                  • Appendix – Financial Expectations in Retirement

                                                                                                                                                      • Figure 50: Most popular expectations of finances in retirement, by demographics, February 2013
                                                                                                                                                      • Figure 51: Next most popular expectations of finances in retirement, by demographics, February 2013
                                                                                                                                                  • Appendix – Reasons for Considering Equity Release Schemes

                                                                                                                                                      • Figure 52: Reasons for considering equity release schemes, by demographics, February 2013
                                                                                                                                                      • Figure 53: Further reasons for considering equity release schemes, by demographics, February 2013
                                                                                                                                                      • Figure 54: Further reasons for considering equity release schemes, by demographics, February 2013
                                                                                                                                                  • Appendix – Reasons for Not Considering Equity Release Schemes

                                                                                                                                                      • Figure 55: Reasons for not considering equity release schemes, by demographics, February 2013
                                                                                                                                                      • Figure 56: Further reasons for not considering equity release schemes, by demographics, February 2013

                                                                                                                                                  Companies Covered

                                                                                                                                                  • Aviva Plc
                                                                                                                                                  • HBOS plc (Halifax Bank of Scotland)
                                                                                                                                                  • Julian Hodge Bank Ltd
                                                                                                                                                  • Just Retirement Ltd
                                                                                                                                                  • Nationwide Building Society
                                                                                                                                                  • Royal Albert Hall
                                                                                                                                                  • Stonehaven

                                                                                                                                                  Equity Release - UK - May 2013

                                                                                                                                                  £1,995.00 (Excl.Tax)