The equity release market is achieving “only a fraction of its potential” despite recent growth, later life lending platform Air says.
Although Equity Release Council data shows total lending grew by 11% last year, Air says the number of new equity release customers increased by less than 1% over the same period – which it says signals a lack of awareness.
“The sector is still performing at a fraction of its potential despite the very welcome growth in total lending last year and the prospect of more to come,” said Will Hale, CEO of Key Advice & Air.
“Innovation in lifetime mortgages means they are very much relevant to a growing number of over-55s homeowners and their needs. However it is clear the lack of awareness among customers and advisers beyond later life lending specialists means they are not being offered lifetime mortgages.”
Air’s research found 80% of advisers expect total lending to continue to grow this year, and the number of new customers to increase. The lender is urging advisers to become familiar with the full range of later life lending products so they can offer advice or refer clients to specialist later life lenders.
“Given customer needs, the £25 billion value of the later life lending market should be higher and the share taken by lifetime mortgages should be higher too,” Hale said.
“The products are there but mortgage, pension and wealth advisers need to look beyond their silos and offer holistic advice – using referral relationships where appropriate to fill gaps in the scope of the advice and/or products that they offer.”
Air suggests potential growth areas include customers coming to the end of five-year fixed rate mortgage rate deals this year, those who want to gift to family members – including helping younger generations onto the property ladder – and people who want to boost retirement income.
