With equity release forecast to enjoy yet another year-on-year growth spurt in 2019, Alice Watson considers the role advisers have to play in turning that into a reality
Equity release in the UK is running strong. Last year saw the seventh consecutive year of growth for the sector with a record £3.94bn of property value taken out nationwide, according to Equity Release Council (ERC) figures - up nearly £1bn on 2017's total. As such, it is not surprising a survey by Censuswide at the end of last year found eight out of 10 advisers expecting the market to surpass 2018's figures this year and achieve new heights.
What is perhaps surprising is how much they expect the market to grow. Two in five advisers (40%) expect it to break the £6bn barrier in 2019 - which would not only be a record total by some distance, but also the biggest annual leap the market has ever seen.
That is a remarkable vote of confidence in equity release from the professionals at the coalface who are discussing the product with consumers. This anticipated growth has many drivers but the ERC's Autumn Report last year identified product innovation as a key one.
As of August 2018, there were 139 different equity release products on the market - almost double the 58 on offer to customers two years prior. In its Autumn Report, the ERC stated it was little coincidence the amount lent also almost doubled in that time - from £571m in the third quarter of 2016 to over £1bn in the corresponding period in 2018 alone.
Every additional product makes equity release more accessible. New features and customisations help make equity release more suitable for previously uncatered-for circumstances. At Canada Life, we try to lead the way and set an example on this kind of innovation - for instance, we recently expanded our Capital Select range with the Capital Select Lite option. This is tailored for customers who are keen for repayment flexibility but at a lower interest rate, which is more competitive with the lowest deals on the market that do not offer that flexibility.
Another key driver of growth in the market is a shifting trend in how customers use equity release. Homeowners are increasingly drawing on their property value for lifestyle-oriented purchases. More customers are using equity release to fund purchases such as new cars, holidays, and property renovations that make their homes more comfortable and enjoyable to live in. That said, use of the product for financial planning reasons - such as to help clear a mortgage, or cover day-to-day living costs - is still popular in its own right.
In addition, customers are using equity release to cover onerous care costs. In the absence of support from the government, with the social care green paper having been repeatedly postponed over the last two years, homeowners are drawing on their property wealth to help pay for longterm care.
They are, however, also using equity release to make home adaptations that allow them to ‘age in place', rather than having to move into a care home. Our customer data from the final quarter of last year found one in 10 over-55s used equity release to add features such as stairlifts or wheelchair ramps that made their homes safer or more accessible.
Support for advisers
Still, while these supply-anddemand drivers are key to the success of equity release, there is another element that advisers think will be vital to making the growth they predict a reality. When asked what was needed to make equity release more attractive in 2019, 40% of advisers said support to help more advisers become qualified to offer the product.
This was ranked ahead of better education for customers and lower product costs (both 37%). And with one in eight advisers (13%) not equity release-qualified, there are still plenty out there who could be trained up to help meet the swelling interest in the product.
Providers should be taking the lead in giving education and support to advisers, as well as consumers. Since last year, therefore, Canada Life has organised a series of events designed to help advisers either obtain the training they need to become equity releasequalified, or to make the most of their existing qualifications.
And from the enthusiasm we have witnessed, we know we are tapping into a real desire among advisers to improve their knowledge of this market. Our first round of workshops was fullybooked, with more than 600 advisers in attendance across our exam and lead generation workshops. Our exam workshops meanwhile gave more than 300 previously unqualified advisers the required training to become qualified to offer the product.
The fundamentals of the equity release market are strong. Our hope now is that, by giving advisers the support they need, we can help make the growth they predict for this year a reality.
Alice Watson is head of marketing and communications at Canada Life Home Finance
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