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Equity Release Schemes - UK - May 2018

“The equity release market is undergoing a resurgence in popularity although this is yet to influence everyday consumer perceptions. New lifetime mortgage products provide the solution for many concerned with the cost of funding their retirement. Mainstream lenders are investing in this market to help people maintain their standard of living in retirement.”
–Sam Marks, Financial Services Analyst

This Report looks at the following areas:

  • Rising house prices: a short-term boost but long-term problem?
  • Equity release can plug the retirement savings gap
  • Equity release industry is booming but perceptions need to change

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
        • Equity Release Council
        • Executive Summary

            • The market
              • Equity release lending up by 42%
                • Figure 1: Forecast value of new equity release schemes sold, 2012-22
              • Companies and brands
                • Legal & General leads a heavily congested market
                  • Figure 2: Equity release market share, by value of new sales, 2016 and 2017
                • Total above-the-line expenditure increased 84% in 2017
                  • Figure 3: Total above-the-line, online display and direct mail advertising expenditure on equity release, 2013-17
                • The consumer
                  • Just 2% use or expect to use equity release
                    • Figure 4: Expected/actual sources of retirement income, 2017 and 2018
                  • Mortgages are the most common form of debt
                    • Figure 5: Current outstanding debts, February 2018
                  • Consumers are generally confident they’ll get by in retirement
                    • Figure 6: Financial situation at retirement age, February 2018
                  • Up to 10% would consider equity release
                    • Figure 7: Consideration of equity release schemes, 2016-18
                  • Consumers need more help in finding equity release advice
                    • Figure 8: Attitudes towards equity release, February 2018
                  • What we think
                  • Issues and Insights

                    • Rising house prices: a short-term boost but long-term problem?
                      • The facts
                        • The implications
                          • Equity release can plug the retirement savings gap
                            • The facts
                              • The implications
                                • Equity release industry is booming but perceptions need to change
                                  • The facts
                                    • The implications
                                    • The Market – What You Need to Know

                                      • Equity release lending up by 42%
                                        • Drawdown accounts for 70% of new customer plans
                                          • Average house prices up by 3% from 2017
                                          • Market Size and Forecast

                                            • Equity release lending up by 42%
                                              • Figure 9: Sales of equity release products, by volume and value, 2011-17
                                            • Growth will continue to be positive over the next five years
                                              • Figure 10: Forecast value of new equity release schemes sold, 2012-22
                                              • Figure 11: Forecast volume of new equity release schemes sold, 2012-22
                                              • Figure 12: Forecast value and volume of new equity release schemes sold, 2017-22
                                            • Forecast methodology
                                            • Market Segmentation

                                              • 53% of growth in the second half of 2017
                                                • Figure 13: Volume of equity release customers compared, H1 2017 and H2 2017
                                              • Drawdown accounts for 70% of new customer plans…
                                                • Figure 14: Proportional distribution of new equity release sales, by product type, 2012-17
                                              • …and attracts an older customer base
                                                • Figure 15: Average age of new customers, by plan type and half years, H1 2014-H2 2017
                                            • Market Drivers

                                              • Average house prices up by 3% from 2017
                                                • Figure 16: Average house prices in the UK, by country, January 2005-January 2018
                                              • Home ownership has fallen, particularly among under-55s
                                                • Figure 17: Housing tenure, by age of household reference person, England data 2008/09 and 2016/17
                                              • Interest-only mortgages present an opportunity for lenders
                                                • Average equity release rate drops 17% since 2016
                                                  • Figure 18: Personal borrowing rates tracker, January 2016-January 2018
                                                • £300 million made available for Ageing Society Grand Challenge
                                                • Regulatory and Legislative Changes

                                                  • FCA makes changes to lifetime product rules…
                                                    • …and modifies Standards for Appropriate Examinations
                                                    • Companies and Brands – What You Need to Know

                                                      • Legal & General leads a heavily congested market
                                                        • Greater interest prompts a spate of new products
                                                          • Total above-the-line adspend increased by 84% in 2017
                                                          • Market Share

                                                            • A heavily congested market
                                                              • Figure 19: Equity release market share, by value of new sales, 2016 and 2017
                                                            • Legal & General was the biggest lender in 2017
                                                              • Figure 20: Top four equity release providers, by value of new sales, 2013-17
                                                          • Competitive Strategies

                                                            • Legal & General prolongs Property Refurbishments Lifetime Mortgage pilot
                                                              • Nationwide is the new kid on the block
                                                                • more 2 life launches Maximum Choice equity release product
                                                                  • SunLife and Age Partnership join forces to launch a new equity release product
                                                                  • Advertising and Marketing Activity

                                                                    • Adspend increased by 84% in 2017
                                                                      • Figure 21: Total above-the-line, online display and direct mail advertising expenditure on equity release, 2013-17
                                                                    • Age Partnership is the biggest spender
                                                                      • Figure 22: Above-the-line, online and direct mail advertising expenditure on equity release, by advertiser, 2015-17
                                                                    • Legal & General makes some noise
                                                                      • Too much TV can be bad for your health
                                                                        • Figure 23: Above-the-line, online display and direct mail advertising expenditure on equity release, by media type, 2017
                                                                      • Nielsen Ad Intel coverage
                                                                      • The Consumer – What You Need to Know

                                                                        • Just 2% use or expect to use equity release
                                                                          • Mortgages are the most common form of debt
                                                                            • Consumers are generally confident they’ll get by in retirement
                                                                              • Up to 10% would consider equity release
                                                                                • Consumers need more help in finding equity release advice
                                                                                • Sources of Retirement Income

                                                                                  • Just 2% use or expect to use equity release
                                                                                    • Private pensions lag behind state provisions
                                                                                      • Figure 24: Expected/actual sources of retirement income, 2017 and 2018
                                                                                    • 75% use or plan to use two or more sources of retirement income
                                                                                      • Figure 25: Repertoire of expected/actual sources of income, February 2018
                                                                                  • Debt Levels at Retirement

                                                                                    • Mortgages are the most common form of debt
                                                                                      • Almost two out of three people have no outstanding debt
                                                                                        • Figure 26: Current outstanding debts, February 2018
                                                                                      • Retirees are less likely to have outstanding debt
                                                                                        • Figure 27: Current outstanding debts, by working status, February 2018
                                                                                    • Financial Confidence at Pension Age

                                                                                      • Consumers are generally confident they’ll get by in retirement
                                                                                        • Figure 28: Financial situation at retirement age, February 2018
                                                                                      • Private pension contributions are key to financial confidence…
                                                                                        • Figure 29: Financial health at retirement, by product used to fund retirement, February 2018
                                                                                      • …as is home ownership
                                                                                      • Consideration of Equity Release

                                                                                        • Up to 10% would consider equity release
                                                                                          • Figure 30: Consideration of equity release schemes, 2016-18
                                                                                        • Hard-pressed consumers still reluctant to consider equity release
                                                                                          • Figure 31: People who might consider equity release to fund retirement, by ACORN group, February 2018
                                                                                      • Attitudes towards Equity Release

                                                                                        • Consumers need more help in finding equity release advice
                                                                                          • 29% agree equity release is a good way to help children financially
                                                                                            • Figure 32: Attitudes towards equity release, February 2018
                                                                                          • Caring for future needs
                                                                                            • High street banks are well positioned to appeal to people aged 45-54
                                                                                              • Figure 33: Attitudes towards equity release, people who answered yes, by age group, February 2018
                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

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

                                                                                                  • Additional best-case/worst-case forecast tables
                                                                                                    • Figure 34: Best- and worst-case forecast for the value of new equity release schemes sold, 2017-22
                                                                                                    • Figure 35: Best- and worst-case forecast for the volume of new equity release schemes sold, 2017-22
                                                                                                  • Forecast methodology

                                                                                                  Equity Release Schemes - UK - May 2018

                                                                                                  US $2,552.20 (Excl.Tax)