2022
9
UK Equity Release Schemes Market Report 2022
2022-08-06T04:10:56+01:00
OX1103155
2195
154217
[{"name":"Financial Services","url":"https:\/\/store.mintel.com\/industries\/finance\/financial-services"}]
Report
en_GB
“2021 was the strongest year yet for equity release sales, and the prospects for future growth remain positive. However, rising inflation could prove a double-edged sword, while a slowdown in…

UK Equity Release Schemes Market Report 2022

£ 2,195 (Excl.Tax)

Description

The UK Equity Release Schemes Market Report 2022 identifies consumers’ attitudes towards equity release schemes UK, the willingness of consumers to use equity release to supplement their incomes, and the impact of the cost of living crisis on the equity economy in the UK. This report covers the equity release UK market size, market forecast, market segmentation and industry trends for the UK Equity Release Market.

Equity Release Schemes UK: Current Market Landscape

The equity release market continued its strong growth in the first half of 2022 and this is also expected to continue in the second half of the year. A rise in property wealth combined with competitive rates are likely to support this growth. The overall outlook is very positive, but rising inflation could impact consumer confidence, thus creating a more defensive mindset.

Moreover, equity release statistics show that lifetime mortgages are becoming more accepted and are starting to be seen as a mainstream choice. This rising acceptance will increase engagement and the potential number of customers.

UK Equity Release Statistics: Market Share and Key Industry Trends

The equity release market will continue to expand, albeit at a slower pace. The slowdown in house price growth will lessen consumer appetite to release equity. The rising cost of living could prove a double-edged sword for equity release schemes UK. If consumers become more financially cautious, some will be reluctant to release equity, while others might be forced to use these products to supplement their income.

However, the cost of living crisis could last throughout 2023, and some over 55-year-olds may see no other option but to use equity release schemes to battle rising inflation.

  • 41% of homeowners aged 45+ think more people are using equity release now than five years ago.
  • 65% of homeowners aged 45+ wouldn’t consider using equity release.
  • 43% of adults don’t know that equity release schemes can be used to repay their existing mortgage.
  • 43% of new equity release sales were accounted for by lump-sum lifetime mortgages.

Future Trends in the Equity Economy in the UK

The long-term outlook for equity release schemes UK improves as economic conditions normalise. The equity release’s target market will continue to grow, and an increasing number of over 55-year-olds will need additional funds to repay debt and fund their retirement, creating more opportunities for providers in this space.

Moreover, a significant number of adults don’t know that equity release schemes can be used to repay their existing mortgage, suggesting that understanding of how lifetime mortgages can be utilised is still not widespread. While this is likely to be a barrier for equity release UK, it also presents an opportunity for providers to increase awareness of how these products can be used and how they can help consumers to manage debt in later life.

Read on to discover more details or take a look at all of our UK Financial Services Market Research.

Quickly Understand

  • Market performance and a five-year market forecast.
  • An analysis of competitive strategies and launch activity.
  • Sources of retirement income.
  • Consideration of equity release schemes.
  • Understanding of equity release schemes.
  • Attitudes towards equity release schemes.

Covered in this Report

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

Expert Analysis from a Specialist in the Field

This report, written by Stefania Apostol, a leading analyst in the Financial Services sector, delivers in-depth commentary and analysis to highlight current trends in the UK Equity Release Market 2022 and add expert context to the numbers.

2021 was the strongest year yet for equity release sales, and the prospects for future growth remain positive. However, rising inflation could prove a double-edged sword, while a slowdown in house price growth will impact consumer confidence. Providers should continue to focus on tackling misconceptions about equity release schemes to improve consumer knowledge and accelerate the industry’s progress.

Stefania Apostol - Financial Services Analyst
Stefania Apostol
Financial Services Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Market context
    • Products covered in this Report
    • Equity Release Council
  2. Executive Summary

    • The five-year outlook for equity release schemes
      • Figure 1: Category outlook, 2022-27
    • The market
    • Equity release sales are expected to continue to grow in 2022
      • Figure 2: New sales of equity release products, by volume and value, 2017-22
    • Growth is forecast to remain positive over the next five years
      • Figure 3: Forecast value of equity release schemes sold, 2017-27
    • Drawdown schemes remain the preferred option
      • Figure 4: Proportional distribution of new equity release sales, by product type, 2017-21
    • Average UK house prices are at a record high, but growth is expected to slow
      • Figure 5: Average UK house price, 2015-22
    • Companies and brands
    • Equity release providers saw their sales increasing in 2021
      • Figure 6: Leading brands’ sales in equity release mortgages, 2020 and 2021
    • Equity release providers focus on product development
    • The consumer
    • Private and state pensions are the main sources of income in retirement…
    • …while equity release schemes still only play a minor part in retirement planning
      • Figure 7: Expected/actual sources of retirement income, 2022
    • Government websites are the top sources of information
      • Figure 8: Expected/actual sources of information when planning for retirement, 2022
    • Many fail to have a detailed retirement plan
      • Figure 9: Behaviours towards retirement, 2022
    • Interest in equity release schemes remains unchanged
      • Figure 10: Consideration of equity release schemes, 2021-22
    • There is still a need to increase understanding of equity release schemes
      • Figure 11: Understanding of equity release schemes, 2022
    • Equity release schemes are seen as difficult products to understand
      • Figure 12: Attitudes towards equity release schemes, 2022
  3. Issues and Insights

    • Rising inflation could prove a double-edged sword for the equity release market
    • Improve consumer knowledge about equity release schemes
  4. Market Size and Performance

    • Equity release sales reached £4.8 billion in 2021…
    • …and growth is expected to continue in 2022
      • Figure 13: New sales of equity release products, by volume and value, 2017-22
  5. Market Forecast

    • The outlook for equity release schemes
      • Figure 14: Category outlook, 2022-27
    • Growth is forecast to remain positive over the next five years
      • Figure 15: Forecast value of equity release schemes sold, 2017-27
      • Figure 16: Forecast value of equity release schemes sold, 2017-27
      • Figure 17: Forecast volume of new equity release schemes sold, 2017-27
      • Figure 18: Forecast volume of new equity release schemes sold, 2017-27
    • Learnings from the last income squeeze
      • Figure 19: New sales of equity release products, by volume and value, 2007-14
    • Forecast methodology
  6. Market Segmentation

    • Sales grew across the three key segments of the market
      • Figure 20: Volume of equity release customers, by type of activity, 2019-21
    • Drawdown schemes remain the preferred option
      • Figure 21: Proportional distribution of new equity release sales, by product type, 2017-21
    • Rising house prices drive an increase in the average amount released
      • Figure 22: Trends in average amounts of property released for new lump-sum and new drawdown initial sum lifetime mortgages, 2017-21
  7. Market Drivers

    • UK’s greying population provides an opportunity for the equity release market
      • Figure 23: UK population, by age, 2020-50
    • People are staying in the workforce for longer
      • Figure 24: UK employment rates of all genders, by age bands over time, 1991-2021
    • Homeownership is falling among under-64s
      • Figure 25: Trends in tenure, by age, 2010/11-2020/21
    • Average UK house prices are at a record high, but growth is expected to slow
      • Figure 26: Average UK house price, 2015-22
    • Rising inflation pushes up the cost of living…
      • Figure 27: Issues faced in the last two months, 2022
    • …and undermines financial confidence
      • Figure 28: Financial Confidence Index, 2019-22
    • Average equity release rate starts to increase
      • Figure 29: Average interest rates for equity release plans taken out, 2019-22
    • Equity release consumers continue to focus on repaying debt
      • Figure 30: Proportion of funds and of customers using equity release, 2021
  8. Regulatory and Legislative Changes

    • The ERC adds a new product standard…
    • …and reintroduces mandatory face-to-face legal advice
    • Over-55s to receive a stronger nudge towards Pension Wise
    • Government suspends triple-lock for 2022/23
  9. Market Share

    • Equity release providers saw their sales increasing in 2021
      • Figure 31: Leading brands’ sales in equity release mortgages, 2020 and 2021
  10. Competitive Strategies and Launch Activity

    • Key Equity Release rebrands to Key Later Life Finance
    • More2Life and London Rebuilding Society launch the Home Improvement Pilot Plan
    • Green lifetime mortgages remain niche
    • New product development offers more choice and flexibility
    • Standard Life Home Finance adds new products to the Horizon range
    • Pure Retirement extends the Heritage range
    • Canada Life expands its product offering
    • Equity release providers continue to focus on advisers
    • Co-op Insurance partners with Legal & General to offer later-life mortgage options
    • Just Group completed its third sale of lifetime mortgages
  11. Advertising and Marketing Activity

    • Advertising expenditure on equity release schemes increases by 10% in 2021/22
      • Figure 32: Total above-the-line, online display and direct mail advertising expenditure on equity release, 2019/20-2021/22
    • Top four advertisers account for almost 90% of ATL adspend
    • High-profile campaigns by household names should lift the industry as a whole
      • Figure 33: Total above-the-line, online display and direct mail advertising expenditure on equity release, by top 4 advertisers, 2020/21-2021/22
    • TV accounts for more than half of total expenditure
      • Figure 34: Total above-the-line, online display and direct mail advertising expenditure on equity release, by media type, 2021/22
    • Nielsen Ad Intel coverage
  12. Sources of Retirement Income

    • Private and state pensions are the main sources of income in retirement
      • Figure 35: Expected/actual sources of retirement income, 2022
    • 45-54s are less likely to expect to use the state pension as a source of retirement income
      • Figure 36: Selected expected/actual sources of retirement income, by age, 2022
    • Equity release schemes still play a minor part in retirement planning
    • 29% of mortgage owners aged 45+ expect to use property-related sources
      • Figure 37: Selected expected/actual sources of retirement income, by homeowners and mortgage owners, 2022
    • Generation X will have far fewer options than their Baby Boomer counterparts
      • Figure 38: Expected/actual sources of retirement income, by workers and retirees, 2022
    • Retirement plans inevitably change when theory becomes reality
  13. Sources of Information

    • Government websites are the top sources of information
    • There’s still scope to boost use of government information sources…
    • …and to improve the profile of equity release products
    • Professional advice is not widespread
      • Figure 39: Expected/actual sources of information when planning for retirement, 2022
    • Media and social media users are more likely to rely on savings and investments
      • Figure 40: Expected/actual sources of retirement income, by expected/actual sources of information when planning for retirement, 2022
  14. Behaviours towards Retirement

    • Many fail to have a detailed retirement plan
      • Figure 41: Behaviours towards retirement, 2022
    • More than a third of over-45s think they would struggle to pay for care costs
      • Figure 42: Selected behaviour towards retirement, by financial situation, 2022
    • 19% of homeowners aged 45+ would feel comfortable using the equity in their homes
      • Figure 43: Selected behaviour towards retirement, by selected sources of retirement income, 2022
      • Figure 44: Behaviours towards retirement, by workers and retirees, 2022
  15. Consideration of Equity Release Schemes

    • Interest in equity release schemes remains unchanged
      • Figure 45: Consideration of equity release schemes, 2021-22
      • Figure 46: Consideration of equity release schemes, by workers and retirees, 2022
    • Openness toward equity release increases among those with tight finances
      • Figure 47: Consideration of equity release schemes, by financial situation, 2022
    • Media and social media boost consideration of equity release
      • Figure 48: Consideration of equity release schemes, by expected/actual sources of information when planning for retirement, 2022
  16. Understanding of Equity Release Schemes

    • There is still a need to increase understanding of equity release schemes
      • Figure 49: Understanding of equity release schemes, 2022
    • 43% of adults don’t know they can use equity release to repay their mortgage
      • Figure 50: Understanding of equity release schemes, by age, 2022
    • Knowledge of inheritance protection is not widespread
      • Figure 51: Image from Key Later Life advertising campaign, March 2022
      • Figure 52: Understanding of equity release schemes, by workers and retirees, 2022
  17. Attitudes towards Equity Release Schemes

    • Equity release schemes are seen as difficult products to understand
    • 41% of homeowners aged 45+ think more people are using equity release
      • Figure 53: Attitudes towards equity release schemes, 2022
    • Position equity release schemes as a useful financial planning option to increase consideration
      • Figure 54: Consideration of equity release schemes, by selected attitude towards equity release schemes, 2022
    • Only a quarter of homeowners aged 45+ think equity release is a useful option to help their children financially
      • Figure 55: Attitudes towards equity release schemes, by workers and retiree, 2022
  18. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
  19. Appendix – Forecast Methodology

    • Market forecast and prediction intervals
      • Figure 56: Forecast value of equity release schemes sold, 2017-27
      • Figure 57: Forecast volume of new equity release schemes sold, 2017-27
    • Market drivers and assumptions
      • Figure 58: Key economic drivers, 2016-26
    • 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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