Ian Atkinson is long-term care expert and IFA at Retirement Solutions
We are seeing a number of emerging trends in this market, two of which are already coming into play. The first one is a general acceptance of lower house valuations, which means that people are more likely to release the equity in their home.
At the beginning of the recession, this certainly was not the case. Everybody thought their house was worth at least what the last one in the road sold for, and many felt short-changed as the property market continued to slide. But as time has passed, homeowners have accepted that the value of their home has fallen, which has resulted in a growth in this market.
As the UK personal debt total reaches a staggering £1.5trn, we also notice an increase in clients with interest-only mortgages having to consider a more traditional equity release route as lenders are insisting on repayment at the end of the term - even if the client has sufficient pension funds to continue to pay the loan.
Claire Barker is chairman of Equity Release Solicitors Association
Baby boomers have benefitted most from the huge growth in property prices since the 1980s, and many of those that have children and grandchildren are keen to pass on some of this wealth. With housing deposits increasingly prohibitive and tuition fees set to triple next year, ERSA's research shows the majority of parents and grandparents would consider releasing equity from their home to assist family with these costs. A key factor of equity release is its flexibility - people can use the money for whatever reason they wish, whether to provide assistance to their family or extra income in retirement.
Andrew Pennie is marketing director at Intelligent Pensions
An ever-growing number of people will approach retirement without the required resources to achieve their desired standard of living.
As such, equity release - however emotive this transaction might be - could be a viable solution to close the gap. Equity release and pension drawdown can work well together, but striking the right balance is vital and financial modelling is the best method for doing this.
Peter Carter is head of product marketing at MetLife UK
Recent new business figures from Safe Home Income Plans show a 12% growth in advances to £206.2m between the second and third quarters of 2011 so there is demand for equity release.
However, it is fair to say that for some time now, the equity release market has been on the cusp of momentous growth without ever quite making it.
The recent downturn in the housing market has certainly taken its toll, but it remains the case that there are easier options available. Trading down the property ladder, for instance, can give access to more capital without the strings attached by equity release.
Equity release is also not particularly effective as a means of funding long-term care costs, if that need arises. Options such as easing existing capped drawdown rules to enable pension investors to use funds to help pay for nursing home care - with any money left subject to 55% tax - are more appropriate.
Ged Hosty is managing director of equity release at Partnership
Many people have focused on falls in the market over the past few years without really understanding what's been going on. A major reason for the fall has been the withdrawal of a number of large lenders, who have taken with them big advertising spend and distribution capability.
However, the fundamentals of increased life expectancies, poor pensions and less family support are more prevalent today than they have ever been. With baby boomers now reaching retirement age, there are more people in real need, with their house as the only significant asset they can call on.
In addition, the government recognises there is an increasing cost for the care of the elderly. The poor state of the country's finances will lead to an even greater emphasis on self-funding. I believe the need to fund domiciliary care will provide significant growth, and I expect a recovering equity release market to provide new products targeted at this area.
Jon King is managing director of More 2 Life
Put simply, the baby boomer generation is heading towards retirement and many of them are ill-equipped to fund their increased life expectancy.
Add to the mix falling pension values and declining annuity rates, and you have a situation where more people will consider the use of the wealth in their property to help fund them at retirement.
The future should be bright, but the industry needs clear statements from government on future regulation. The industry also needs to raise its own game by developing new products that suit the new generation of clients.
Steve Lowe is external affairs and customer insight director at Just Retirement
The fundamentals driving growth in the market are strong. Today's retirees are increasingly seeking solutions to top up their retirement incomes due to lower retirement annuity rates. They are also seeking solutions to repay outstanding debts at retirement.
Some of the barriers to growth have been on the supply side - the withdrawal of some manufacturing brands and an absence of distribution. But there have been some positive developments. Over the past year, new product providers have entered the market, while the emergence of new distribution by powerful consumer brands such as Saga and Age UK has helped to extend the reach of the market.
On the demand side, retirees are also softening their attitude to inter-generational wealth transfer. Kids are encouraging their parents to be a little more considerate of their own needs.
Andrew Tully is technical manager at MGM Advantage
Many will reach retirement age without sufficient savings to allow them to live their retirement in the comfort which they would like. This means growing numbers of people will look for alternative ways of supplementing their income. With many people in and approaching retirement owning their residential property (with little or no debt attached to it), equity release may be an attractive way to help them live their later years in more comfort, while still being able to live in the family home.
Andrea Rozario is director general of SHIP
We have already seen equity release advances increase by 12% over the third quarter, showing there is an appetite for these products. We expect to see the market continue to steadily grow.
This growth is due to a combination of factors, which mean that the UK's over-55s are having to explore new ways of funding retirement.
Many are struggling to meet the rising cost of living on a fixed income, with inflation eroding the value of their savings and fuel and food prices soaring. At the same time, people are living longer and have to consider how they will pay for any possible care they might need.
As SHIP's most recent market figures show, awareness of equity release as a way of meeting numerous costs has already increased. As demand increases, we expect to see further product innovation, and for this to help fuel growth further.
Duncan Young is chief executive of Retirement Plus
The latest SHIP statistics show some growth in the market and there is a general feeling that the combination of demographics, poor pension provision and long-term care needs will fuel further demand.
But while these are a necessary component for growth, they are not sufficient. With one partial exception, all equity release providers are funded by a limited number of life companies mainly through the sale of annuities.
There has to be a question about the capacity of these companies to fund significant growth and also meet the requirements of previously written drawdown schemes. So, to see sustained growth requires new product providers and maybe from outside the life industry. The obvious source is occupational pension funds, which have a similar liability profile to a life company annuity book. It is a positive that some funds have already started research into this possibility, probably to provide finance to existing market players.
Without such new entrants to the equity release market, I cannot see it meeting the potentially strong uptick in demand.
Peter Turley is marketing director at Newlife
The issues concerning the provision of adequate finance in retirement are significant, and in the future we'll all need to take greater responsibility for our own later-life finances.
As such, people are becoming more aware of the benefits of releasing the money tied up in their home. But while growth is certain, when it will take off is still under debate.
Newlife is calling on the government to seize this opportunity with both hands and acknowledge that the funding gap between future pension income and the ability for individuals to pay for their own care is insurmountable. It is inevitable that wealth created in the family home will have to be utilised.
Peter Welch is head of sales and distribution at Bridgewater Equity Release
Drivers for growth include an ageing population, low rates for savers and annuitants, underfunding for retirement living, inflation eroding the fixed income of the retired, and inability to raise mortgage finance.
Now this does not, of course, immediately translate into an equity release sector seeing a massive increase in business volume overnight because those drivers have been in place for some time. The challenge is to arrive at a position where consumers automatically match their needs to the solution that equity release delivers.
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