Wider societal changes have made for a challenging trading landscape for the majority of industries over the last couple of years, but it’s been gratifying to see the equity release sector weather the storm better than most. Activity levels (in terms of new business at least) are largely in line with pre-pandemic levels, and the number of new plans taken out in H2 2020 and H1 2021 actually exceeded the levels seen during H1 2019. Additionally, there’s been a 19% year-on-on increase in Q3 activity according to the latest ERC figures, with the market on track to register a total of £4bn of lending this year.

Rising house prices have meant that people have been able to release greater levels of housing equity than they would have had 12-18 months ago. When allied to increasing numbers of higher LTV products and rising interest in lifetime mortgages from those at the higher end of the property market, this has resulted in an increasingly diverse customer base with a variety of needs and priorities. While car purchases and holidays have naturally fallen off the funds usage radar, property purchases, gifting, even long-term care and private medical expenses have all become increasingly popular among the ever-changing equity release demographic.

Additionally, the marketplace is becoming increasingly flexible, with a 14% year-on-year rise in the number of products allowing voluntary capital repayments (68% vs 54%) and a marked six-month rise in the number of products offering fixed ERCs, with a figure of 89% to the end of July comparing favourably against the 56% recorded at the end of January.

It means that the market remains well-placed to take advantage of continually rising house prices, with the UK’s total private property wealth increasing from £4.21tr at the end of H1 2020 to £4.87tr a year later. The rising prices mean that the equity-debt ratio in an average property is shifting, with averages pointing to over £201,600 of property wealth being available for homeowners to draw on, and over three quarters of property value in an average home being tied up in equity rather than debt.

We’ve been refining and enhancing our product range throughout the year, understanding that customers require greater flexibility and higher LTVs to take advantage of rising house prices, culminating in the recent launch of our Emerald lifetime mortgage range. Customers are able to benefit from the option to repay up to 12% of the initial amount borrowed annually without incurring ERCs, with optional repayments available via direct debit as well as traditional bank transfer and debit card methods. Additionally the new product suite features our highest LTVs, ranging from 29.5% for those aged 55 all the way to 57.5% for those aged 82 and over, alongside the option of 4% cashback.

We’ve also introduced a flexible pricing structure on both our Classic and Emerald ranges, meaning clients benefit from a unique and personalised interest rate that is contingent on several factors including age, loan amount, property type and postcode. This ultimately allows for more competitive pricing and a lower cost of borrowing, and the approach also creates added transparency for customers in relation to the KFI validity period. All KFIs generated are valid for 21 days, protecting customers from any rate increases after receiving a quote, and allowing time for them to consider their options before submitting an application.

Many advisers remain positive about the future prospects of the equity release market, rightly attributing the growth to ongoing product development and innovation. It’s indisputable that the market’s upwards trajectory in recent years has been aided by the continual development of its product offering, adapting and innovating to continue to meet customer needs. While we appear to have weathered the worst of the pandemic-induced challenges of late, it’s vital that we don’t lose sight of the need to continue doing so going forward.

With society having been exposed to the changeable nature of life and the fluidity of their circumstances many are more aware than ever of the need to find financial solutions that not only meet their current needs, but are able to continue doing so in the future. As an industry, we have a responsibility to ensure that we offer customers a range of viable retirement options – and now, perhaps more than ever, we need to make sure we deliver them.

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