Bridgewater outlines equity release key concerns

The analysis comes from Bridgewater Equity Release, the home reversion specialist, and is based on the concerns and discussion topics raised at its regular Broker Forums and the results of its regular monthly survey.

Bridgewater has compiled a top five list of the topics which are most discussed at the Broker Forums. They are:

• How to find new equity release customers/lead generation.
• Home reversion plans – requests for information on areas such as the circumstances when reversions are appropriate and how to deal with clients who raise the home ownership issue.
• State benefits and ensuring clients are aware of their entitlements and how benefits may be affected by taking out an equity release product.
• How to move to a fee-based model of equity release advice provision.
• How to ensure best practice with equity release advice.

Bridgewater believes there has been a noticeable change in advisers’ concerns regarding the number of lenders currently active in the equity release market. In the first six months of 2010, those attending the forums often wanted to discuss the falling numbers of providers and how this might be halted, however, along with the recent influx of new providers, this issue appears less of a pressing concern.

The home reversion specialist also asked its monthly newsletter readers what type of new equity release products they would like to see introduced to the marketplace. Answers included:

• More flexible products, particularly interest-only – one suggestion was a product where interest could be serviced in part or whole.
• The availability of equity release buy-to-let products.
• Monthly drawdown products; income-based equity release.

Peter Welch, head of sales and distribution at Bridgewater Equity Release, commented: “Advisers come to our broker forums with all manner of questions and concerns however a number of issues are raised time and time again. Recently we have seen a move away from deliberations on the number of providers active in the market to much more focused questions on how advisers can ensure they maintain and improve their client numbers to requests for further specific information on the home reversion sector and where it is appropriate.

“Certainly in a static, or even falling, house price environment we are seeing a move towards reversions given that they provide absolute certainty to the client; advisers are fully aware that clients with these wants, needs and circumstances could be much more suited to a reversion solution rather than a lifetime mortgage.

“Even with relatively small numbers of providers in the equity release sector, innovation is not dead, however it remains to be seen whether we are on the verge of more product opportunity. We suspect that while advisers would like to see the pushing of the envelope in terms of product design, they are comfortable with current product availability and are now less concerned about falling provider numbers.”