Ninety-four per cent of financial advisers are confident about the outlook for the equity release market over the next year, while less than three-quarters (71%) feel the same about the residential property market.

New research from more2life showed that over half of advisers (54%) believe further product innovation from equity release lenders will be most beneficial to their equity release business over the next 12 months. Many believe that further product innovation will also be key to longer term success, as it will help the later life market keep up with consumer demand. When asked what product innovation over-55s will most want once the later life lending market returns to normal conditions, over one-third (35%) of advisers said the development of a mortgage that becomes equity release at the customer’s request would be at the top of the list.

One in five (21%) of advisers thought that later life lending products which allow regular small drawdowns to pay for everyday retirement costs would be what older borrowers would most like to see. This was felt the strongest among sole traders who serve the equity release market, with 33% of this group citing this answer. A further 20% of respondents felt that a more holistic approach to advice that covers pensions and property would be what consumers most want to see from the later life lending market going forward. This response was primarily shared by advisers at larger, residential mortgage firms.

Aside from product innovation, other factors that advisers expect to be positive for their equity release business over the next year include growing consumer awareness of equity release (57%) and greater support from equity release providers (22%). Of all adviser firms, sole traders who advise on the wider residential mortgage market (including equity release) said that more support from equity release lenders would benefit their business the most over the next year.

However, when asked about the biggest challenges they’re likely to face in the next year, almost half (47%) of advisers considered a lack of consumer awareness about equity release one of their main obstacle.  Those working for residential mortgage firms with less than 30 advisers (67%) and generalist IFA’s (50%) were most likely to hold this belief suggesting that more still needs to be done to educate over-55s as to their options. 

This was followed by lender criteria in the equity release market, with 35% of advisers saying this would be one of the main challenges to their lifetime mortgage business in the next 12 months, while 32% felt the same about the underwriting approaches of equity release lenders. Both of these options were cited the most by advisers at larger equity release firms.

Dave Harris, CEO at more2life, commented:  “While the pandemic has thrown unprecedented challenges at the industry, it is good to see that advisers are optimistic about the future of the equity release market as well as their own businesses.  That said, they are less optimistic about the overall property market as it returns to more normal trading conditions following the stamp duty boost. 

“They are also keen that, as providers, we focus on product innovation with over half suggesting that this is what will most benefit their businesses and their customers over the next twelve months.  Lack of consumer awareness continues to be a concern for some but over half of advisers suggest that the profile of these products is growing and that coupled with greater support from equity release lenders the next twelve months is looking positive. 

“Today’s research makes interesting reading and gives providers a clear mandate to focus on product innovation, adviser support and consumer education as a matter of priority.  There is much to be positive about in this market over the next twelve months as it looks to return to strong growth.”

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