2020
9
UK Equity Release Schemes Market Report 2020
2020-08-27T15:50:47+01:00
OX989572
2195
123205
[{"name":"Financial Services","url":"https:\/\/store.mintel.com\/industries\/finance\/financial-services"}]
Report
en_GB
“Despite a positive first quarter, the equity release market is forecast to be heavily impacted by the COVID-19 crisis in 2020. Brexit uncertainty disrupted growth in the first half of…

UK Equity Release Schemes Market Report 2020

£ 2,195 (Excl.Tax)

Description

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Equity Release Schemes: Inc Impact of COVID-19 – UK market including the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

The equity release market looked set to recover from a slight decline in 2019, with the market showing strong signs of growth in Q1 2020. However, the COVID-19 outbreak and the subsequent lockdown will result in a significant decline in new business during 2020. Only once people have a clearer idea of future prospects for the housing market and the wider economy will growth return to the market. There is also likely to be a shift in the reasons to consider equity release products, with more people facing financial difficulties due to unemployment and a loss of income, and increased caution over more discretionary spending.

 

Expert analysis from a specialist in the field

Written by Douglas Kitchen, a leading analyst in the Finance sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Despite a positive first quarter, the equity release market is forecast to be heavily impacted by the COVID-19 crisis in 2020. Brexit uncertainty disrupted growth in the first half of 2019, and COVID-19 will have the same effect, but to a more significant degree for the duration of the year ahead. The consequences of the lockdown however, will lead some people to re-evaluate what matters most to them. Equity release providers have an opportunity to show how they can help people provide assistance to family and fulfil new experiences. Decreasing confidence about retirement funding in general will also drive greater consideration of the possibilities that equity release can offer.

Douglas Kitchen
Financial Services Analyst

Table of Contents

  1. Overview

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

    • The market
    • COVID-19 will hit lending in 2020, but future prospects still look positive
      • Figure 1: Forecast value of new equity release schemes sold, adjusted for COVID-19, 2014-24
    • A fall in new customers drives a decline in new business in 2019
      • Figure 2: Volume of equity release customers, by type of activity, 2017-19
    • House price growth was slowing before COVID-19
      • Figure 3: Average house price in the UK, March 2012-February 2020
    • Over-45s are more pessimistic about future economic prospects
      • Figure 4: Perceived impact of the COVID-19 outbreak on UK economic growth, by age, 30th April-7th May 2020
    • Home/garden improvements and holidays are the most popular uses
      • Figure 5: Popular uses of equity release, 2019
    • Equity Release Council bolsters consumer protection
    • Impact of COVID-19 on equity release
      • Figure 6: Expected impact of COVID-19 on equity release short, medium and long term, 19 May 2020
    • Companies and brands
    • Legal & General, JRP Group and LV= saw sales decline in 2019…
    • …but Aviva and More2Life increased lending
      • Figure 7: Estimated equity release market share, 2019
    • COVID-19 drives innovation in the market
    • New product developments bring greater flexibility and choice
    • The consumer
    • Declining confidence in sources of retirement income…
      • Figure 8: Expected/actual sources of retirement income, 2016-20
    • …but people remain positive about their eventual retirement prospects
      • Figure 9: Financial situation at retirement age, February 2020
    • Equity release remains a niche proposition
      • Figure 10: Consideration of equity release, February 2020
    • Over 40% would opt to receive funds as a lump sum
      • Figure 11: Equity release funding options, February 2020
    • Overcoming negative perceptions continues to be a major challenge
      • Figure 12: Concerns about equity release, February 2020
    • Only one in four have sought retirement advice
      • Figure 13: Attitudes towards equity release advice, February 2020
    • Long-term care and helping out family are the major drivers
      • Figure 14: Motivations for considering equity release, February 2020
    • What we think
  3. The Impact of COVID-19 on Equity Release

    • Short, medium and long-term impact on the industry
      • Figure 15: Expected impact of COVID-19 on Equity Release short, medium and long-term, 19 May 2020
    • Short term:
    • Medium term:
    • Long-term:
    • Opportunities and Threats
    • Uncertainty will damage sales in the short-term
    • Lockdown poses a logistical challenge for providers
    • More people will be looking for retirement planning advice
    • An increased desire to help out families…
    • …and make up for lost time
    • Impact on the equity release market
    • New lending forecast to recover from an initial decline
      • Figure 16: Forecast value of new equity release schemes sold, adjusted for COVID-19, 2014-24
    • Shifts in consumer behaviour
    • Financial confidence drops
      • Figure 17: The financial confidence index, January 2016-April 2020
    • A shift in retirement funding expectations
      • Figure 18: Expected/actual sources of retirement income, 2016-20
    • Impact on key consumer segments
    • 55-64 year olds are more likely to feel the impact of a recession
    • Mortgage holders are more likely to need to revaluate position
    • Empty nesters have a desire to get away
    • How a COVID-19 recession will reshape the market
    • The impact on the market will be relatively short-lived
    • A different type of recession
    • Falling rates and a drive for more flexibility
    • Impact on the marketing mix
    • Face-to-face advice will remain the focus
    • Expanding the reach through direct channels and partnerships
    • Product flexibility will be in demand
    • A focus on family and living life to the full will drive engagement
    • COVID-19: Market context
  4. Issues and Insights

    • COVID-19 will drive greater discussion around retirement funding
    • The facts
    • The implications
    • Changing perceptions has become more important than ever
    • The facts
    • The implications
  5. The Market – What You Need to Know

    • New business declines in 2019…
    • …driven by a fall in new customers
    • House price growth was slowing before COVID-19
    • Over-45s are more pessimistic about future economic prospects
    • Home and garden improvements and holidays the most popular uses
    • Equity Release Council bolsters consumer protection
  6. Market Size and Forecast

    • Economic uncertainty results in a decline in new business in 2019
      • Figure 19: New sales of equity release products, by volume and value, 2012-19
    • COVID-19 market forecast
    • Sharp decline predicted in 2020
      • Figure 20: Forecast value of new equity release schemes sold, adjusted for COVID-19, 2014-24
      • Figure 21: Forecast value of new equity release schemes sold, adjusted for COVID-19, 2014-24
      • Figure 22: Forecast volume of new equity release schemes sold, adjusted for COVID-19, 2014-24
      • Figure 23: Forecast volume of new equity release schemes sold, adjusted for COVID-19, 2014-24
    • Pre-COVID-19 forecast: a swift return to growth was expected
      • Figure 24: Forecast value of new equity release schemes sold, 2014-24
      • Figure 25: Forecast value of new equity release schemes sold, 2014-24
      • Figure 26: Forecast volume of new equity release schemes sold, 2014-24
      • Figure 27: Forecast volume of new equity release schemes sold, 2014-24
    • Forecast methodology
  7. Market Segmentation

    • Returning customers increase, but new customers decline in 2019
      • Figure 28: Volume of equity release customers, by type of activity, 2017-19
    • Drawdown options account for 64% of new sales
      • Figure 29: Proportional distribution of new equity release sales, by product type, 2013-19
    • Average amount accessed declines for new drawdown customers
      • Figure 30: Average amount of property wealth accessed, by product type, 2017-19
  8. Market Drivers

    • Equity release target market is set to continue to grow
      • Figure 31: UK population, by lifestage, mid-2018-mid-2043
    • House price growth was slowing before the COVID-19 outbreak
      • Figure 32: Average house price in the UK, March 2012-February 2020
    • Over-45s have a more negative outlook on the economy
      • Figure 33: Perceived impact of the COVID-19 outbreak on UK economic growth, by age, 30th April-7th May 2020
    • Later-life lending market also declined in 2019
      • Figure 34: Volume of lifetime mortgage sales vs volume of mortgage sales to customers aged 56+, 2014-19
    • Home/garden improvements and holidays the most popular uses
      • Figure 35: Popular uses of equity release, 2019
    • Proportion of owner-occupiers aged 55-64 is declining
      • Figure 36: Tenure in households with the household reference person aged 55-64, 2008/09-2018/19
  9. Regulatory and Legislative Changes

    • FCA takes exploratory measures into the later-life lending market
    • ERC bolsters consumer protection…
    • …and updates its legal advice rules following COVID-19
    • Further confusion over the launch of Pensions Dashboard
  10. Companies and Brands – What You Need to Know

    • Legal & General, JRP Group and LV= saw sales decline in 2019…
    • …but More2Life and Aviva increased lending
    • COVID-19 drives innovation in the market
    • New product developments bring greater flexibility and choice
    • Total advertising expenditure declines
  11. Market Share

    • Legal & General, JRP Group and LV= saw sales decline in 2019…
    • …while More2Life, Aviva and Pure Retirement increased lending
      • Figure 37: Estimated equity release market share, 2019
  12. Competitive Strategies

    • Providers respond to the COVID-19 outbreak
    • Brands turn to remote valuations…
    • …while More2Life and LV= guarantee rates and product features for those ineligible
    • New advisory developments
    • Legal & General launches in-house advice business
    • Openwork expands its equity release offering
    • A new comparison tool for advisers launches
    • Key and ABAKA investigate the power of AI for equity release advice
    • More2Life unveils new lending criteria tool
    • New product developments bring greater flexibility and choice
      • Figure 38: Number of equity release product options and features, 2019 and 2020
    • Aviva enhances its repayment options
    • More2Life updates its tailored range
    • Legal & General introduces downsizing protection
  13. Advertising and Marketing Activity

    • Above-the-line adspend falls in 2020…
      • Figure 39: Total above-the-line, online display and direct mail advertising expenditure on equity release, 2017-20
    • … But the largest advertisers increase expenditure
      • Figure 40: Above-the-line, online display and direct mail advertising expenditure on equity release, by advertiser, 2017-20
    • TV accounts for close to half of total expenditure
      • Figure 41: Above-the-line, online display and direct mail advertising expenditure on equity release, by media type, 2020
    • Note about adspend
  14. The Consumer – What You Need to Know

    • Declining confidence in sources of retirement income…
    • …but people remain positive about their eventual retirement prospects
    • Equity release remains a niche proposition
    • Over 40% would prefer to receive funds as a lump sum
    • Overcoming negative perceptions will prove to be a major challenge
    • Only one in four have sought retirement advice
    • Long-term care and helping out family are the major drivers
  15. Sources of Retirement Income

    • COVID-19 drives a shift in expectations around retirement funding
    • Equity release remains a niche proposition
      • Figure 42: Expected/actual sources of retirement income, 2016-20
    • The appeal of downsizing declines among over-65s
      • Figure 43: Expected/actual sources of retirement income, by age, February 2020
    • Less than half of those with moderate means expect to use a private pension
      • Figure 44: Expected/actual sources of retirement income, by ACORN group, February 2020
  16. Financial Confidence in Retirement

    • Over 80% expect retirement finances to be OK
      • Figure 45: Financial situation at retirement age, February 2020
    • Confidence is higher amongst the retired
      • Figure 46: Financial situation at retirement age, by employment status, February 2020
    • Building on existing confidence is vital for the over-65s
      • Figure 47: Financial situation at retirement age, by age, February 2020
  17. Consideration of Equity Release

    • Interest in equity release remains unchanged
      • Figure 48: Consideration of equity release, February 2020
    • Interest is highest among the less confident
      • Figure 49: Consideration of equity release, by financial confidence in retirement, February 2020
    • Consideration is highest among 45-64s
      • Figure 50: Consideration of equity release, by age, February 2020
  18. Equity Release Funding Options

    • Lump-sum funding options are preferred
      • Figure 51: Equity release funding options, February 2020
    • 45-54s are the most interested in receiving regular payments
      • Figure 52: Equity release funding options, by age, February 2020
    • Greater flexibility appeals to those considering equity release
      • Figure 53: Equity release funding options, by consideration of equity release, February 2020
  19. Concerns about Equity Release Schemes

    • Equity release continues to struggle with negative perceptions
      • Figure 54: Concerns about equity release, February 2020
    • Concerns about inheritance continue to be a barrier
      • Figure 55: Concerns about equity release, by consideration of equity release, February 2020
  20. Attitudes towards Equity Release Advice

    • Only one in four have sought retirement advice
    • Brand familiarity is also a factor when looking for advice
      • Figure 56: Attitudes towards equity release advice, February 2020
    • Those paying off mortgage are looking for general retirement advice
      • Figure 57: Attitudes towards equity release advice, by housing situation, February 2020
  21. Motivations for Considering Equity Release

    • Changing perceptions will be a challenge
      • Figure 58: Motivations for considering equity release, February 2020
    • Long-term care is less of a factor for over-65s
      • Figure 59: Motivations for considering equity release, by age, February 2020
    • COVID-19 will increase focus on family and boosting income
      • Figure 60: Motivations for considering equity release, by consideration of equity release, February 2020
  22. Appendix – Data Sources, Abbreviations and Supporting Information

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

    • Additional best-case/worst-case forecast tables (Pre-COVID-19 forecasts)
      • Figure 61: Best- and worst-case forecast for the value of new equity release schemes sold (pre-COVID-19 forecast), 2019-24
      • Figure 62: Best- and worst-case forecast for the volume of new equity release schemes sold (pre-COVID-19 forecast), 2019-24
    • Forecast methodology

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

Brand/Company

Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

Market reports provide appendices of data to support the research and insight produced. Our databooks* are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.

*databooks not available with UK B2B Industry reports.

Below is a sample report, understand what you are buying.

Click to show report
2024 Sample Consumer Cover

Please Note: This is a sample report. All of the figures, graphs, and tables have been redacted. Our reports are available to download in PDF and PPT formats.

Trusted by companies. Big and small.

Want to speak to us directly?

Contact us with your enquiry and our expert global team can help.

Get in touch