Equity Release Schemes - UK - May 2017

Equity Release Schemes - UK - May 2017

May 2017 Mintel Wealth ManagementN/A Price :
$ 2583

Lenders have attempted to ‘normalise’ equity release by introducing measures to offer homeowners more flexibility and more competitive interest rates on lifetime mortgages.
The substantial growth seen in the market suggests this is working but with this will come increased scrutiny from regulators and the media, meaning providers must continue to work hard on restoring the industry’s reputation.

Table of Content

OVERVIEW
What you need to know
Scope of this Report
Equity Release Council

EXECUTIVE SUMMARY
The market
Equity release sales grew by a third in 2016
Figure 1: Sales of equity release products, by volume and value, 2011-16
Maturity of interest-only mortgages will help equity release sales to kick on
Figure 2: Forecast value of new equity release schemes sold, 2011-21
Companies and brands
Big three lenders control 85% of the market
Figure 3: Equity release market share, by value of new sales, 2015 and 2016
The consumer
One in 10 over-45s expect to downsize
Figure 4: Expected/actual sources of retirement income, February 2017
Nearly a quarter of 60-64-year-olds still paying off mortgage
Figure 5: Current outstanding debts, February 2017
Around one in seven weighing up equity release schemes
Figure 6: Consideration of equity release schemes, February 2015-February 2017
Education can help to broaden appeal
Figure 7: Attitudes towards equity release, February 2017
What we think

ISSUES AND INSIGHTS
The expectation of inheritance is dying out
The facts
The implications
Peer power
The facts
The implications

THE MARKET – WHAT YOU NEED TO KNOW
Equity release sales grew by a third in 2016
Mortgage repayments push up plan values
Equity release buoyed by strong housing market
40,000 interest-only mortgages maturing each year
The pension gaps

MARKET SIZE AND FORECAST
Equity release sales grew by a third in 2016
Figure 8: Sales of equity release products, by volume and value, 2011-16
Market forecast
Maturity of interest-only mortgages will help equity release sales to kick on
Brexit uncertainty contributing to house price slowdown
Figure 9: Forecast value of new equity release schemes sold, 2011-21
Figure 10: Forecast volume of new equity release schemes sold, 2011-21
Figure 11: Forecast value and volume of new equity release schemes sold, 2016-21
Forecast methodology

MARKET SEGMENTATION
Two in three plans are drawdown
Figure 12: Proportional distribution of new equity release sales, by product type, 2012-16
Mortgage repayments push up plan values
Figure 13: Average amount released, by product type, H1 2015-H2 2016

MARKET DRIVERS
Equity release buoyed by strong housing market…
Figure 14: Average house prices in the UK, January 2005-January 2017
…but growth may have peaked
Number of over-45s renting has soared in the past five years
Figure 15: Housing tenure, by age of household reference person, England data 2010/11 and 2015/16
40,000 interest-only mortgages maturing each year
The pension gaps
Figure 16: Consumer agreement with statements regarding their pension, June 2016
Equity release used to enjoy retirement as well as to service debt
Figure 17: Reason for choosing equity release, 2011 and 2016
Boundaries between equity release and mortgages becoming more blurred

COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Big three lenders control 85% of the market
Brokers bolster advice services
JRP Group rolls out new trading brand
Providers look to carve out a niche

MARKET SHARE
Big three lenders control 85% of the market
Figure 18: Equity release market share, by value of new sales, 2015 and 2016
Legal & General sales tripled in 2016
Figure 19: Top four equity release providers, by value of new sales, 2013-16

COMPETITIVE STRATEGIES
Strong preference for face-to-face advice
Figure 20: Preferred sources of retirement income advice, February 2017
Brokers bolster advice services
JRP Group rolls out new trading brand
Legal & General lands with a bang
Room for more?
Providers look to carve out a niche
Family affairs

ADVERTISING AND MARKETING ACTIVITY
Total above-the-line expenditure rose by 80% in 2016
Figure 21: Above-the-line, online display and direct mail advertising expenditure on equity release, 2012-16
Leading brokers’ ATL spend doubled in 2016
Figure 22: Above-the-line, online display and direct mail advertising expenditure on equity release, by advertiser, 2015 and 2016
TV accounts for nearly half of ATL expenditure
Figure 23: Above-the-line, online display and direct mail advertising expenditure on equity release, by media type, 2016

THE CONSUMER – WHAT YOU NEED TO KNOW
One in 10 over-45s expect to downsize
Nearly one in three over-45s still paying off mortgage
Around one in seven weighing up equity release schemes
Education can help to broaden appeal
Peer power

SOURCES OF RETIREMENT INCOME
One in 10 consumers expect to downsize
Figure 24: Expected/actual sources of retirement income, February 2017
One in 20 home buyers to use equity release to fund retirement
Figure 25: Expected/actual sources of retirement income, by housing tenure, February 2017
Aggregation could offer more transparency
Figure 26: Repertoire of expected/actual sources of retirement income, February 2017

DEBT LEVELS AT RETIREMENT
Nearly one in three over-45s are still paying off mortgage
Figure 27: Current outstanding debts, February 2017
Majority of homeowners are debt-free
Figure 28: Current outstanding debts, by housing tenure, February 2017
Only a quarter of people in largest households are debt-free
Figure 29: Current outstanding debts, by number of people living in household, February 2017

FINANCIAL HEALTH IN RETIREMENT
30% of over-45s feeling cautious or concerned
Figure 30: Financial health in retirement, February 2017
The next generation of retirees expect to be less comfortable
Figure 31: Financial health in retirement, by working status, February 2017
Thinking about life after death
Figure 32: Financial health in retirement, by marital status, February 2017

CONSIDERATION OF EQUITY RELEASE
Around one in seven weighing up equity release schemes
Figure 33: Consideration of equity release schemes, February 2015-February 2017
Mortgage owners more open to releasing equity
Figure 34: Consideration of equity release schemes, February 2017

ATTITUDES TOWARDS EQUITY RELEASE
Education can help to broaden appeal
Figure 35: Attitudes towards equity release, February 2017
Expectation of inheritance is dying out

SOURCES OF RETIREMENT INCOME ADVICE
Peer power
Figure 36: Preferred sources of retirement income advice, February 2017
Equity release audience not shut off to technology
Figure 37: Preferred sources of retirement income advice, by consideration of equity release, February 2017

APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology

APPENDIX – MARKET SIZE AND FORECAST
Additional best-case/worst-case forecast tables
Figure 38: Best- and worst-case forecast for the value of new equity release schemes sold, 2016-21
Figure 39: Best- and worst-case forecast for the volume of new equity release schemes sold, 2016-21
Forecast methodology

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