But the market will continue to suffer until lenders deliver the kind of products that homeowners want, said the wealth manager’s mortgage director Gary Festa.
Following a seminar conducted this month for a selective group of Surrey-based homeowners in the 60 plus age bracket , Festa said that 80 per cent – 8 out of ten of those attending the seminar – were fundamentally keen on the idea of equity release as a means of bringing in additional retirement income.
“Equity release has been proven time and again to be the solution of choice for retired or near retired, property rich, cash poor homeowners,” said Festa.
“In today’s ultra low base rate climate there is a greater demand for income, especially now that pension funds, annuities and savings rates have plummeted.
“The problem is that lenders are not offering the kind of equity release product that potential borrowers want,” he said.
“Lenders are currently only offering fixed rates, and while these can give a degree of longer term security, they do not reflect today’s far lower base rate.
“Typical rates are now well over 6% and this is poor value.
“The feedback we are getting is that homeowners who may well take the plunge with equity release would like to see an option of a tracking deal as well fixed rates being offered, especially if these trackers were combined with a cap so that the maximum cost was known.
It is felt that this would be a very attractive proposition to the buying public.
“It makes sense: why take out a fixed rate when base rates are forecast to keep coming down? Especially when they seem uncompetitive,” he added.
While there are two main types of plan - lifetime mortgages and home reversion – the vast majority of people choose a lifetime mortgage, which is a loan against the value of the home.
“In a climate where barely any new mortgage business is being written, lenders have a golden opportunity to do well in one of the few potential growth areas of the economy. But they need to deliver the kind of products people actually want,” said Festa.
