2023
9
UK Equity Release Schemes Market Report 2023
2023-08-04T04:07:54+01:00
OX1155121
2195
165560
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Report
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“Despite a record value of new business in 2022, 2023 will bring many challenges for the equity release market. Equity release rates have neared 7%, acting as an additional barrier…

UK Equity Release Schemes Market Report 2023

£ 2,195 (Excl.Tax)

Description

Stay ahead of the curve and future-proof your business with Mintel’s UK Equity Release Schemes Market Report 2023. Our full report is packed with consumer-led market intelligence, the latest equity release market trends and consumer behaviours affecting your business. Get a 360° view of the equity release industry, including market size, share and forecasted growth to help you align your business strategy with the needs of your audience.

Below, we’ve handpicked the key insights analysed in the full report and summarised the core topics.

Topics Analysed in this Report

  • Equity release market performance and a five-year market forecast.
  • Analysis of the leading providers in the equity release market, including competitive strategies and launch activity.
  • Analysis of sources of retirement income and consideration of equity release schemes.
  • Barriers to consideration of equity release schemes.
  • Drivers and information sources among those who would consider equity release schemes.

Equity Release Market Outlook

While 2022 saw record performance in the equity release market, the challenges brought about by the rising cost of living creates considerable uncertainty. September’s mini budget led to a steep rise in interest rates for equity release schemes and disrupted product availability. This has impacted the appeal of equity release products to many consumer groups, particularly among the wealth management sector of the market.

  • Equity release market size: Mintel estimates new plan sales will reach an estimated £3.2 billion.

Equity Release Statistics, Trends and Opportunities

Consumers more willing to downsize than use equity release

The most common source of retirement income is the state pension followed by personal pensions and savings. Equity release schemes are not currently a mainstream retirement option among consumers. Only a small minority of over-45s in the UK already use or expect to use equity release to fund their retirement.

  • Equity release market challenge: 3% of over-45s plan to use equity release to fund their retirements, whereas 9% expect to downsize.

Demystifying the equity release market

Despite the growing need for retirement funding options in the UK, consideration of equity release schemes remains low. Education plays a role in demystifying concerns about equity release products and helping potential customers to better understand their credit options and make informed decisions about retirement funding.

  • Equity release statistics: 16% of consumers might consider equity release schemes to fund their retirements.

To learn how to connect with your audience, purchase our full UK Equity Release Schemes Market Report 2023.  Discover lucrative innovation opportunities to help your business grow during times of financial uncertainty.

Leading Brands in the Equity Release Market

More2Life, Canada Life, Pure Retirement, Aviva, Legal & General, Just Group, LV=

Additional Features Included with Your Purchase

  • Interactive Data Book: This gives you unlimited access to a consumer confidence tracker that is segmented into 25 different demographic categories.
  • Different Digital Formats: PDF for conveniently sharing with your team, PowerPoint for quickly including in your presentation, as well as Word and Excel.
  • Mintel’s Clients Portal: Our portal offers instant access to actionable analysis and trends pieces relevant to your industry that are published almost daily. You can also browse for more market research reports.

Expert Insights from a Retail Analyst

This report, written by Natasha Hayes, a leading financial services analyst, delivers in-depth commentary and analysis to highlight trends in the equity release market and add expert context to the numbers.

Despite a record value of new business in 2022, 2023 will bring many challenges for the equity release market. Equity release rates have neared 7%, acting as an additional barrier to engagement, while the market continues to grapple with long-standing issues around trust and consumer understanding. However, the Consumer Duty provides an opportunity to boost trust and consideration of equity release solutions among pre-retirement groups through improved transparency and product development.”

Natasha Hayes

Natasha Hayes
Senior Financial Services Analyst

Table of Contents

  1. Overview

      • Key issues covered in this Report
        • Products covered in this Report
          • Equity Release Council
          • Executive Summary

              • The five year outlook for equity release schemes
                • Figure 1: Category outlook, 2023-27
              • The market
                • Market size and forecast
                  • Figure 2: Market forecast for equity release schemes – value of schemes sold, 2023-28
                • Surge in drawdown plans and further advances in 2022
                  • Figure 3: Volume of new equity release sales, by type of activity, 2020-22
                • Proportion of lump sum payments increases
                  • Average value released from homes remains stable
                    • Figure 4: Trends in average amounts of property released for new lump-sum and new drawdown initial sum lifetime mortgages, 2018-22
                  • Interest rates near 7%
                    • Figure 5: Average interest rates for equity release plans taken out, 2019-23
                  • Consumer Duty brings a wave of change to retail finance
                    • Companies and brands
                      • Most brands report very strong equity release sales in 2022
                        • Figure 6: Leading brands’ sales in equity release mortgages, 2021 and 2022
                      • New product offerings offer more choice and flexibility
                        • LiveMore plans to enter equity release market
                          • The consumer
                            • Consumers more willing to downsize than use equity release
                              • Figure 7: Expected sources of retirement funding, 2023
                            • Most over-45s are not prompted to review their retirement plans
                              • Figure 8: Prompts to make or review plans for funding retirement, 2023
                            • Working over-45s more open to equity release
                              • Figure 9: Consideration of equity release schemes, 2023
                            • Multiple factors act as a barrier to consider equity release
                              • Figure 10: Barriers to equity release schemes, 2023
                            • Inheritance remains a concern
                              • Motivations are driven by desire to supplement retirement income
                                • Figure 11: Motivations for using equity release schemes, 2023
                              • Improve information and communication to those who may consider the product
                                • Figure 12: Attitudes towards equity release schemes, 2023
                              • Planning for later life is a priority for over-45s and their families
                                • Figure 13: Attitudes towards later life planning, 2023
                            • Issues and Insights

                              • Mini budget creates turbulent environment for equity release
                                • Consumer Duty provides an opportunity to enhance consumer-centricity
                                  • Opportunities to future-proof the market
                                    • Discussing finances between family generations could open doors for equity release
                                      • Market can get ahead of the curve among environmentally conscious
                                      • Market Size and Performance

                                        • Sales reach record £6.2 billion in 2022
                                          • However, value of sales expected to tumble in 2023…
                                            • Figure 14: Volume and value of new sales of equity release products, 2016-23
                                          • …driven by higher rates making the product less appealing
                                          • Market Forecast

                                            • A challenging year ahead for equity release providers…
                                              • Figure 15: Category outlook, 2023-27
                                            • …however, sales will pick up from 2024
                                              • Figure 16: Market forecast for equity release schemes – value of schemes sold, 2023-28
                                              • Figure 17: Market forecast for equity release schemes – value of schemes sold, 2018-28
                                              • Figure 18: Market forecast for equity release schemes– volume of schemes sold, 2022-27
                                              • Figure 19: Market forecast for equity release schemes – volume of schemes sold, 2018-28
                                            • Learnings from the last income squeeze
                                              • Figure 20: Value of equity release schemes sold, 2006-14
                                              • Figure 21: Volume of equity release schemes sold, 2006-14
                                            • Forecast methodology
                                            • Market Segmentation

                                              • Surge in drawdown plans and further advances in 2022
                                                • Figure 22: Volume of new equity release sales, by type of activity, 2020-22
                                              • Proportion of lump sum payments increases
                                                • Figure 23: Proportional distribution of new equity release sales, by product type, 2017-23
                                              • Average value released from homes remains stable
                                                • Figure 24: Trends in average amounts of property released for new lump-sum and new drawdown initial sum lifetime mortgages, 2018-22
                                            • Market Drivers

                                              • Older age population will continue to grow over next 30 years
                                                • Figure 25: UK population projections, 2020
                                              • Home ownership falls among under-65s
                                                • Figure 26: Trends in tenure, by age, 2011/12-2021/22
                                              • Early signs that consumer confidence is recovering
                                                • Figure 27: Household consumer confidence index, 2016-23
                                              • Rising bank rate and gilt crisis hit equity release market
                                                • Figure 28: Average interest rates for equity release plans taken out, 2019-23
                                              • PLSA warns of increase in retirement costs
                                                • House prices peak in November 2022
                                                  • Figure 29: Average UK house prices, 2016-23
                                                • Home and garden improvements drive use of equity release
                                                  • Figure 30: Proportion of equity release customers, by use of equity release, 2022
                                              • Regulatory and Legislative Changes

                                                • Consumer Duty brings a wave of change to retail finance
                                                  • Transparency will help to maintain trust when it comes to high rates…
                                                    • …and clear information will boost consumer understanding
                                                      • Firms must enhance consumer support measures
                                                        • Products and services must be designed to meet the needs of customers
                                                          • Increase in voluntary repayments following Council mandate
                                                          • Market Share

                                                            • Most brands had strong equity release sales growth in 2022
                                                              • Figure 31: Leading brands’ sales in equity release mortgages, 2021 and 2022
                                                            • Canada Life and Pure Retirement show largest growth
                                                              • Aviva repriced on a weekly basis to avoid suspending sales
                                                                • Legal & General struggles compared to competitors
                                                                • Competitive Strategies and Launch Activity

                                                                  • New product offerings offer more choice and flexibility
                                                                    • Legal & General enhances equity release offering
                                                                      • Pure Retirement reintroduced high LTV products for over-80s
                                                                        • Standard Life Home Finance launches three new lifetime mortgage products
                                                                          • LiveMore plans to enter equity release market
                                                                            • More2Life offers free energy performance certificates
                                                                              • Offering in France could provide an equity release alternative in the UK
                                                                              • Advertising and Marketing Activity

                                                                                • Equity release advertising remains stable
                                                                                  • Figure 32: Total above-the line, online display and direct mail advertising expenditure on equity release, 2020/21-2022/23
                                                                                • Age Partnership makes up half of overall advertising expenditure
                                                                                  • Figure 33: Total above-the line, online display and direct mail advertising expenditure on equity release, by top five advertisers, 2020/21-2022/23
                                                                                • TV campaigns lead the way in equity release advertising in the UK
                                                                                  • Aviva launch ‘The Children have spoken campaign’
                                                                                    • Key’s latest campaign focuses on boosting retirement funds
                                                                                      • Figure 34: Total above-the line, online display and direct mail advertising expenditure on equity release, by media type, 2022/23
                                                                                    • Nielsen Ad Intel coverage
                                                                                    • Sources of Retirement Funding

                                                                                      • State Pension is top source of retirement income
                                                                                        • Figure 35: Expected sources of retirement funding, 2023
                                                                                      • Consumers more willing to downsize than use equity release
                                                                                        • Figure 36: Expected/actual use of equity release schemes to fund retirement, 2021-23
                                                                                      • Most over-45s are not prompted to review their retirement plans
                                                                                        • Figure 37: Prompts to make or review plans for funding retirement, 2023
                                                                                    • Consideration of Equity Release Schemes

                                                                                      • Education and awareness campaigns needed to boost consideration
                                                                                        • Figure 38: Consideration of equity release schemes, 2023
                                                                                      • Working over-45s more open to equity release
                                                                                        • Figure 39: Consideration of equity release, by working status, 2023
                                                                                      • Financial situation also plays a part in consideration
                                                                                        • Figure 40: Consideration of equity release schemes, by financial situation, 2023
                                                                                      • Longer term opportunities to target next generation of retirees
                                                                                        • Figure 41: Consideration of equity release schemes, by age, 2023
                                                                                    • Barriers to Using Equity Release Schemes

                                                                                      • Multiple factors act as a barrier to consider equity release
                                                                                        • Figure 42: Repertoire analysis – number of barriers to consider equity release schemes, 2023
                                                                                      • Trust in the sector and concerns about later life borrowing are key barriers
                                                                                          • Figure 43: Barriers to equity release schemes, by age, 2023
                                                                                        • Inheritance remains a concern
                                                                                          • Mortgage holders are more open to later life loans
                                                                                            • Figure 44: Barriers to equity release schemes, by housing situation, 2023
                                                                                        • Motivations for Using Equity Release Schemes

                                                                                          • Motivations are driven by desire to supplement retirement income
                                                                                            • Figure 45: Motivations for using equity release schemes, 2023
                                                                                          • Equity release for home improvement has shifted from aspirational to essential spending…
                                                                                            • …but innovation could help consumers improve the green efficiency of their homes
                                                                                            • Sources of Information for Equity Release Schemes

                                                                                              • Financial advice crucial among those interested in equity release
                                                                                                • Figure 46: Information sources for equity release schemes among those who would consider taking out a policy, 2023
                                                                                              • However, consumer groups are an important source of impartial information
                                                                                              • Attitudes towards Equity Release Schemes

                                                                                                • Finding opportunities to bolster trust
                                                                                                  • Improve information and communication to those who may consider the product
                                                                                                    • Figure 47: Perception of the reputation of equity release providers, by age, 2023
                                                                                                  • Demonstrate to consumers how the changing market conditions affect them
                                                                                                    • Figure 48: Attitudes towards equity release schemes, 2023
                                                                                                  • Take advantage of Consumer Duty to prove benefits of equity release
                                                                                                    • Figure 49: Attitudes towards when equity release should be considered, by age, 2023
                                                                                                  • Planning for later life is a priority for over-45s and their families
                                                                                                    • Figure 50: Attitudes towards later life planning, 2023
                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                    • Abbreviations
                                                                                                      • Consumer research methodology
                                                                                                      • Appendix – Forecast Methodology

                                                                                                        • Market forecast and prediction intervals
                                                                                                          • Figure 51: Forecast value of equity release schemes sold, with prediction intervals 2023-27
                                                                                                          • Figure 52: Forecast volume of equity release schemes sold, with prediction intervals 2023-27
                                                                                                        • Market drivers and assumptions
                                                                                                          • Forecast methodology

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