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Equity Release is Fastest Growing Mortgage Market

Increasingly competitive equity release rates have contributed to a rapid growth in the equity release segment of the mortgage market in recent years.


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The spring 2017 Equity Release Market Report from the Equity Release Council shows that in terms of customer numbers, equity release is currently the fastest growing part of the mortgage market. In 2016 alone, the number of customers increased by 22%, and in the last decade, the number of lifetime mortgages taken increased from one in 70 home-mover and remortgages combined to just one in 27.

Significant Fall in Rates

The demand for lifetime mortgages has been increasing in line with our ageing population. While the report found that 65 – 74 year olds most commonly took out equity release mortgages, customers from the age of 75 and above are also on the increase. With more retirees looking for ways to unlock the money invested in their properties, new equity release product providers are becoming more competitive as they join the market to meet this new demand. The result has driven the average rates of 51 bps to 5.45%, although some providers are going below 5%. It means that the equity release sector has seen the biggest fall in rates.


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Financial Advice

The increase of older customers looking for equity release products highlights the need for back office systems for financial advisers that are capable of collating, processing and presenting their customers’ financial profiling. Vendors such as have been providing systems to independent financial advisers for many years, adapting their products to suit changing regulations, demographics and customer types, so that advisers can provide the most suitable advice and at the same time automate much of the day to day back office processes.

It’s clear that there is a greater appetite among older home owners to bolster their retirement through releasing equity from their homes, and industry experts agree that more should be done to turn it from a niche market into a mainstream one. Legal & General Home Finance managing director, Steve Ellis, said that equity release lenders, regulators and trade bodies need to work together to increase the range of products to suit the needs of these new customers, and that advisers qualified in equity release should be encouraged to join this growing sector.

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