Thursday, June 13, 2024

Equity Release Expectations In 2022

If you look at trends in the equity release market over the past few years, you wouldn’t be surprised to learn that 80% of advisers predicted further industry growth in 2022. 60% of these advisers, who participated in research, believed the industry would return to normal trading, while 20% expected rapid expansion. Only 1% felt that trading would be affected in 2022 due to COVID-19 restrictions.

Equity release has never been cheaper, safer, or more flexible, and most believe that more of the same is still to come.

More from the Expert Advisers

Nearly half (47%) of advisers stated they had received more consumers proactively contacting them about rebroking, indicating that customers are increasingly aware than ever before of the market’s wider product developments that provide them with a variety of options on how to finance their retirement.

When asked to order product features in terms of their clients’ importance, three-quarters (75%) of advisors cited competitive interest rates as the most essential.

Fixed early repayment charges and the option to make penalty-free payments were highly rated by borrowers as essential. Second and third place went to fixed early repayment charges and the ability to make penalty-free payments, respectively.

Over half of advisors (51%) reported that inheritance protection was their clients’ least important issue, suggesting that customers are comfortable with the decisions they’ve made regarding housing equity and the amount they can leave loved ones.

What is the Equity Release Industry Worth?

According to the Equity Release Council’s Q3 annual report, the equity release industry will have reached 4bn in 2021. This is for the first time in the history of equity release. In line with predictions, this figure is likely to be beaten in 2022.

How Has Growth Impacted the Equity Release Industry?

Since the Equity Release Council formation in 2021, the industry has rapidly expanded, with more lenders and plans popping up on the market. This has meant further competition and a greater need for innovation to stand out from the crowd.

As a result, equity release fixed interest rates are lower than ever. Past interest rates were around 6.5%, but 2021 saw rates sitting as low as 2.3%. They did slightly increase towards the end of 2021, so there’s room for them to drop again in the new year.

Industry growth has also meant more flexible products. According to Jason Stubbs, specialist in equity release sector at EveryInvestor, equity release lenders are dropping the cost of equity release products and offering freebies, like a free valuation and cashback. Some equity release companies even have free in-house advisers.

In Conclusion

As more and more lenders offer flexible and sustainable plans and the Equity Release Council’s continual commitment to the industry, the array of available equity release products is likely to expand. With an economic crash surrounding the industry, there’s no wonder that more and more retirees are looking at their assets to access cash wealth.

Whether a home reversion scheme or a lifetime mortgage, equity release was one of the best ways to access retirement income in 2021 safely. Will 2022 bring the same? According to expert advisers, the answer is yes.

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