A rise in over 55s needing money to financially support grown-up children and mounting care costs are the main influences on the rapidly expanding range, according to the Autumn 2018 Equity Release Market Report.
It showed the number of products available to those considering later life lending had increased to 139 in August 2018 compared to 58 in 2016.
The Equity Release Council, the trade body representing the equity release sector and the organisation which produced the report, explained numbers taking out the product had increased by 81% in the last two years. And the rise in products, it explained, was needed to meet their increasingly complex needs in later life.
Retirement and family
It said property wealth was emerging as mainstream retirement funding choice because the range of products offered greater flexibility to help customers manage their finances in later life whilst limiting costs.
The figures showed four in five product options offered consumers the choice to make ad-hoc, penalty-free voluntary partial repayments of their loan, up from 68% a year ago. Meanwhile lifetime mortgages now included the option to ringfence equity, which means homeowners can retain some of the value of their property as a guaranteed minimum inheritance.
Indeed, considering the needs of their children is a huge influence on many over-55s taking out equity release – particularly with the rise of the Bank of Mum and Dad.
David Burrowes, chairman of the Equity Release Council, said: “These figures highlight the rise in new products and increased product flexibility, which is helping older homeowners to fulfill a host of pressing personal, social and financial needs.
“This innovation has brought more competition to the later life lending arena, while maintaining the standards and protections which ensure equity release products are futureproofed to provide good outcomes for consumers.”
This view was echoed by Will Hale, CEO at Key, who said its own data showed around 28% of equity release customers were using their property wealth to help families as well as to boost their retirement finances. Some were even looking to property before pension funds.
And Dave Harris, CEO at equity release lender more 2 life, said its research showed borrowing by the over-65s would surpass £142bn by 2027.
He added: “Equity release is in a prime position to help homeowners who require access to extra cash whether they need it to repay borrowing such as interest-only mortgages, improve their standard of living in retirement or help their families.”
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