2021
9
UK Equity Release Schemes Market Report 2021
2022-01-12T03:18:01+00:00
OX1050531
2195
146742
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Report
en_GB
“The pandemic has brought a series of challenges, but it has also proved beneficial for the equity release market. The prospects for further growth are strong as a series of…

UK Equity Release Schemes Market Report 2021

£ 2,195 (Excl.Tax)

Description

The UK Equity Release Schemes report identifies consumer attitudes towards competitive strategies, launch activity, and barriers to equity release schemes in the UK. This market report covers the market size, market forecast, market segmentation and industry trends for the UK Equity Release Schemes market in the UK. 

Current Market Landscape

The pandemic has created challenges for the market, but some of the measures taken to mitigate the economic impact have proved beneficial for the equity release market. Government intervention through the Stamp Duty tax relief led to an increase in house prices, improving homeowners’ confidence and making equity release more attractive. This is positive for potential growth of the equity release sector, but sales providers will have to continue to focus on boosting awareness of equity release schemes and developing products that have a wider appeal.

  • 22% of homeowners aged 45+ say they would consider an equity release scheme to fund their retirement. 6% would definitely consider it, while 17% say they might consider using a lifetime mortgage.
  • 64% of homeowners aged 45+ say they wouldn’t consider using equity release, including 42% who say they would definitely not consider it.

While house prices are expected to continue to increase, contributing to the growth of the equity release market, the emergence of the Omicron variant has created additional uncertainty. The full impact of the new variant is still to be determined, but continued disruption combined with a rise in inflation could prove a double-edged sword for the equity release market, with some of those over-55s reluctant to release equity, while others might turn to these products to supplement their income.

Future Market Trends in Equity Release 

Lifetime mortgages still have limited appeal. While some historic negativity towards this sector continues to play a role, other factors, such as concerns about inheritance and an aversion to debt, remain major barriers.

The proportion of 45-64s who have a mortgage has increased, creating more opportunities for equity release providers. Equity release schemes are more likely to be considered by mortgage owners than those who own their home outright, with 8% using or expecting to use these products to fund their retirement. As the proportion of people carrying debt into later life continues to grow, later life lending and lifetime mortgages will see increased demand.

Read on to discover more details or take a look at all of our UK Equity Release market research.

Quickly understand

  • Market performance, including the impact of COVID-19 and a five-year market forecast.
  • An analysis of competitive strategies and launch activity.
  • Confidence in retirement finances and retirement planning.
  • Consideration of equity release schemes.
  • Barriers to equity release schemes.
  • Reasons for considering equity release.

Covered in this report

Brands: More2Life, Legal & General, Aviva, Pure Retirement, Just Group, Canada Life, LV=, Phoenix Group, Royal London, Hodge, Age Partnership, Saga.

Expert analysis from a specialist in the field

This report, written by Utku Tansel, a leading analyst in the Retail sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The pandemic has brought a series of challenges, but it has also proved beneficial for the equity release market. The prospects for further growth are strong as a series of factors, such as the ageing population and rising house prices, are likely to play in favour of the equity release market. However, equity release schemes are still a relative niche option, and providers will have to continue to focus on increasing awareness of these products.

Utku Tansel - European Retail AnalystStefania Apostol
Financial Service Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Survey background and change in methodology
    • COVID-19: market context
    • Economic and other assumptions
    • Products covered in this Report
    • Equity Release Council
  2. Executive Summary

    • Impact of COVID-19 on equity release
      • Figure 1: Short-, medium- and long-term impact of COVID-19 on equity release, 2020-25
    • The market
    • Equity release sales expected to surpass £4 billion in 2021
      • Figure 2: New sales of equity release products, by volume and value, 2016-21
    • The equity release market is forecast to grow over the next five years
      • Figure 3: Forecast value of equity release schemes sold, 2016-26
    • Drawdown lifetime mortgages remain the most popular option
      • Figure 4: Proportional distribution of new equity release sales, by product type, 2016-20
    • House prices continue to increase
      • Figure 5: Average UK house price, 2005-21
    • Companies and brands
    • More2Life is the largest provider in the market
    • Legal & General and Aviva experience decline…
    • …while Pure Retirement and Just Group grow sales
      • Figure 6: Leading brands’ sales in equity release mortgages, 2019 and 2020
    • Equity release providers focus on advisers…
    • …flexibility…
    • …as well as early repayment charges
    • The consumer
    • Survey background and change in methodology
    • 5% of over-45s use or expect to use equity release
      • Figure 7: Expected/actual sources of retirement income, 2021
    • Over-65s are the most confident…
    • …while 45-54s are less confident they will be able to afford the same lifestyle in retirement
      • Figure 8: Confidence in affording the desired lifestyle throughout retirement, by age, 2021
    • Around one in five would consider equity release
      • Figure 9: Consideration of equity release schemes, 2021
    • Damaging inheritance prospects is a major barrier to equity release
      • Figure 10: Barriers to equity release, 2021
    • Equity release schemes are seen as a backup option
      • Figure 11: Reasons for considering equity release schemes, 2021
    • Prospective customers want strong consumer protection
      • Figure 12: Important features of equity release schemes, 2021
    • Almost half of over-45s haven’t done anything to plan for retirement
      • Figure 13: Retirement planning, 2021
    • Care in later life is a significant concern…
    • …but only 25% would like professional advice to plan for future care needs
      • Figure 14: Attitudes towards later life, 2021
  3. Issues and Insights

    • Equity release schemes remain a niche retirement option…
    • …but have great potential for expansion
  4. Market Size and Performance

    • Impact of COVID-19 on equity release schemes
      • Figure 15: Short-, medium- and long-term impact of COVID-19 on equity release, 2020-25
    • Equity release sales expected to surpass £4 billion in 2021
      • Figure 16: New sales of equity release products, by volume and value, 2016-21
  5. Market Forecast

    • The equity release market is forecast to grow over the next five years…
    • …helped by an increase in house prices…
    • …and favourable demographics
    • Sales are forecast to reach almost £6 billion by 2016
      • Figure 17: Forecast value of equity release schemes sold, 2016-26
      • Figure 18: Forecast value of equity release schemes sold, 2016-26
      • Figure 19: Forecast volume of new equity release schemes sold, 2016-26
      • Figure 20: Forecast volume of new equity release schemes sold, 2016-26
    • Market drivers and assumptions
      • Figure 21: Key drivers affecting Mintel’s market forecast, 2015-25
    • Forecast methodology
  6. Market Segmentation

    • The equity release market is driven by new sales
      • Figure 22: Volume of equity release customers, by type of activity, 2018-20
    • Drawdown lifetime mortgages remain the most popular option
      • Figure 23: Proportional distribution of new equity release sales, by product type, 2016-20
    • Average amount of property released increases for new lump-sum and new drawdown customers
      • Figure 24: Trends in average amounts of property released for new lump-sum and new drawdown initial sum lifetime mortgages, 2017-21
  7. Market Drivers

    • The target audience is set to increase
      • Figure 25: UK population, by age, 2018-40
    • Renters aged 45-54 are the fastest-growing tenant group
      • Figure 26: Trends in tenure, by age, 2009/10-2019/20
    • House prices continue to increase
      • Figure 27: Average UK house price, 2005-21
    • Older adults remain confident about their future financial situation…
    • …but inflationary pressures are mounting
      • Figure 28: Financial confidence index, 2015-21
    • Equity release interest rates remain low
      • Figure 29: Average interest rate for equity release plans taken out, 2019-21
    • Over-55s focus on repaying debt
      • Figure 30: Proportion of funds and of people using equity release, 2020
  8. Regulatory and Legislative Changes

    • FCA concludes its review into equity release sales and advice process
    • The Equity Release Council creates a new endorsement mark…
    • …and launches Legal Forum
    • Pensions Dashboard to launch in 2023
    • The government sets out a new adult social care reform
  9. Market Share

    • More2Life is the largest provider in the market
    • Legal & General and Aviva experience decline…
    • …while Pure Retirement and Just Group grow sales
      • Figure 31: Leading brands’ sales in equity release mortgages, 2019 and 2020
  10. Competitive Strategies

    • Phoenix Group consolidates its position in the equity release market
    • Just Group sells equity release portfolio
    • Royal London enters the equity release market
    • Takeover of LV= failed to get 75% support
    • Hodge withdraws from the equity release market
    • Equity release providers focus on advisers
    • Age Partnership launches a switching service
  11. Launch Activity and Innovation

    • Providers focus on flexibility…
    • …as well as early repayment charges
    • Saga introduces Money Back Guarantee
    • Just Group adds a green lifetime mortgage to its portfolio
    • Equity Release Supermarket launches smartER platform
  12. Advertising and Marketing Activity

    • Above-the-line adspend on equity release remains flat
      • Figure 32: Total above-the-line, online display and direct mail advertising expenditure on equity release, 2018/19-2020/21
    • Age Partnership and Key remain the largest advertisers
    • Legal & General and Aviva increase expenditure
      • Figure 33: Total above-the-line, online display and direct mail advertising expenditure on equity release, by top 4 advertisers, 2019/20 and 2020/21
    • TV continues to dominate advertising expenditure
      • Figure 34: Total above-the-line, online display and direct mail advertising expenditure on equity release, by media type, 2020/21
    • Nielsen Ad Intel coverage
  13. Sources of Retirement Income

    • Survey background and change in methodology
    • The vast majority expect to use state or private pension in retirement
    • 5% of over-45s use or expect to use equity release
      • Figure 35: Expected/actual sources of retirement income, 2021
    • Mortgage owners are more likely to consider property-related sources
      • Figure 36: Homeowners and mortgage owners, by selected sources of income, 2021
  14. Financial Confidence in Retirement

    • Over-65s are the most confident…
    • …while 45-54s are less confident they will be able to afford the same lifestyle in retirement
      • Figure 37: Confidence in affording the desired lifestyle throughout retirement, by age, 2021
    • Home ownership boosts confidence
    • The less confident expect to rely on fewer sources to fund their retirement
      • Figure 38: Confidence in affording the desired lifestyle throughout retirement, by sources of income, 2021
  15. Consideration of Equity Release Schemes

    • Around one in five would consider equity release
      • Figure 39: Consideration of equity release schemes, 2021
    • Openness to equity release is higher among younger age groups
      • Figure 40: Consideration of equity release schemes, by age, 2021
    • Little difference in consideration between the confident and unconfident
      • Figure 41: Consideration of equity release, by financial confidence in retirement, 2021
  16. Barriers to Equity Release Schemes

    • Damaging inheritance prospects is a major barrier to equity release
      • Figure 42: Barriers to equity release, 2021
    • Loans in later life represent a concern
    • 13% don’t know enough about equity release schemes
  17. Reasons for Considering Equity Release Schemes

    • Equity release schemes are seen as a backup option
    • Specific uses of equity release are considered less relevant
      • Figure 43: Reasons for considering equity release schemes, 2021
    • 55-64s are the most likely to consider equity release to pay for care in later life
      • Figure 44: Reasons for considering equity release schemes, by age, 2021
  18. Important Features of Equity Release Schemes

    • Prospective customers want strong consumer protection…
    • …and inheritance protection
      • Figure 45: Important features of equity release schemes, 2021
    • Protection needs to be marketed alongside product benefits
      • Figure 46: Important features of equity release schemes, by consideration of equity release schemes, 2021
  19. Retirement Planning

    • Almost half of over-45s haven’t done anything to plan for retirement
    • 23% of over-45s have done their own research
      • Figure 47: Retirement planning, 2021
    • Opportunities to engage those looking to increase their retirement age
      • Figure 48: Retirement planning, by consideration of equity release schemes, 2021
  20. Attitudes towards Later Life

    • Care in later life is a significant concern…
    • …but only 25% would like professional advice to plan for future care needs
    • The pandemic draws attention to residential care concerns
      • Figure 49: Attitudes towards later life, 2021
  21. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
  22. Appendix – Central Forecast Methodology

    • Market forecast and prediction intervals
      • Figure 50: Forecast value of equity release schemes sold, 2021-26
      • Figure 51: Forecast volume of new equity release schemes sold, 2021-26
    • Market drivers and assumptions
      • Figure 52: Key drivers affecting Mintel’s market forecast, 2020-26
    • Forecast methodology

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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.

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