769 Equity Release Plans Now On Market

21 June 2021 | General

The number of equity release products has hit a new high with customers able to choose from 769 products on the market, according Key Partnerships. This is a 21 per cent increase since the start of 2020 and more than double the amount of plans available just two years ago in 2019 (306).

Flexibility Continues to Increase:

Growth in the number of plans has been accompanied by increasing innovation from lenders with more borrowers than ever able to access a host of flexible features. The number of plans on the market offering downsizing protection (+392 per cent) increased the most over the two years followed by ad hoc fee free repayments (+278 per cent) and interest repayments (+319 per cent).

The latter mean that equity release products are more comparable than ever before to other later life borrowing options such as retirement interest-only mortgages and later life mortgages as they allow easier management of a client’s borrowing.  The ability to make ad hoc interest free repayments (+278 per cent) has also soared with customers keen to enjoy the flexibility this offers.

Drawdown (+86 per cent) has seen the smallest increase but this enduringly popular feature has been commonly available for several years now.  The number of products with fixed early repayment charges (+137 per cent) has seen a more modest increase but with Legal & General adding this as an option in May and Just announcing they intend to do this in future, this is likely to grow.

Feature Plans with Feature  per cent of plans  per cent increase over 2 Years
Drawdown 443 58 per cent +86 per cent
Downsizing protection 352 46 per cent +392 per cent
Accept sheltered properties** 355 46 per cent +117 per cent
Inheritance protection 203 26 per cent +323 per cent
       
Interest payments 339 44 per cent +319 per cent
Fee Free Ad-hoc repayments*** 315 41 per cent +278 per cent
Fixed ERCs 438 57 per cent +137 per cent
Paying income 16 2 per cent N/A

Jason Ruse, business development director at Key Group said: “The growth in the equity release market has been remarkable with the number of products available doubling in just two years which provides significantly more flexibility and options for clients.  The number of features has also boomed with over 300 per cent more products offering options such as interest repayments, downsizing protection and inheritance protection.

“While this type of growth in numbers and features should be welcomed, it does highlight the need for advisers to keep a close eye on what is happening and what features each lender is able to offer. Things are changing fast at the moment and in just six months, we saw 21 per cent more products that advisers need to consider. One of the reasons for this is that the majority of customers during the pandemic have released equity due to an immediate need, but as the UK edges closer to less restrictions we will see clients releasing equity to fulfil both retirement as well as aspirational needs

“You may be able to dabble in some markets but this is certainly not the case in the later life sector and those who haven’t transacted business for a while should consider whether setting up a referral relationship might not be a better idea.  Being able to refer your client with confidence to a specialist adviser who fully understands the market is going to pay greater dividends in the long term.”

The table below shows how the range of plans on the market has developed since 2017.

PLAN FEATURE End 2017 End 2018 End 2019 End 2020 1 June 2021
Downsizing protection 36 76 250 277 352
Interest payments 8 9 81 219 339
Drawdown 41 49 90 311 443
Income payments N/A N/A 16 16 16
Inheritance protection 21 25 48 70 203
Accept sheltered properties** 35 47 163 330 355
Fixed ERCs 40 55 185 221 438
Ad-hoc repayments*** 60 107 203 326 315
           
TOTAL PRODUCTS 86 134 306 634 769

This post has originally been featured in Property Wire.