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Description

Description

“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's included

What's included

Table of contents

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

                                                                                                                                                  About the report

                                                                                                                                                  This report will give you a complete 360-degree view of your market. Not only is it rooted in robust proprietary and high-quality third-party data, but our industry experts put that data into context and you’ll quickly understand:

                                                                                                                                                  • The Consumer

                                                                                                                                                    What They Want. Why They Want It.

                                                                                                                                                  • The Competitors

                                                                                                                                                    Who’s Winning. How To Stay Ahead.

                                                                                                                                                  • The Market

                                                                                                                                                    Size, Segments, Shares And Forecasts: How It All Adds Up.

                                                                                                                                                  • The Innovations

                                                                                                                                                    New Ideas. New Products. New Potential.

                                                                                                                                                  • The Opportunities

                                                                                                                                                    Where The White Space Is. How To Make It Yours.

                                                                                                                                                  • The Trends

                                                                                                                                                    What’s Shaping Demand – Today And Tomorrow.

                                                                                                                                                  Please Note: This is a sample report. All of the figures, graphs, and tables have been redacted.

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