New business figures are expected to exceed £1,200 million in 2006 and around £1,709 million by the end of 2007. However, whilst the benefits of lifetime mortgages and home reversion schemes are becoming more apparent to the consumer there are still concerns over access to high quality advice in this sector.
While the value of plans has not risen at the exponential rates seen in previous years the number of plans continues to grow at a healthy rate illustrating the popularity of new flexible drawdown products. The SHIP Member Survey also predicted the entry into the market of major high street names such as Nationwide, Halifax and Barclays. The majority of members also expected competition to increase in the first quarter of 2007.
Newer flexible drawdown products have proved particularly popular with consumers. These allow consumers to withdraw only the equity which they require for immediate purposes, maintaining the rest within the property interest-free until they have need of a further cash advance. Members forecast even greater flexibility in products in 2007 as well as new products such as enhanced release plan for impaired lives. The survey also found that one of the main reasons for a client taking out a plan was to enhance their quality of life e.g. buying a new car, carrying out home improvements.
However, members have highlighted a number of concerns coming from consumers. Chief amongst these was the effect of equity release on their estate and the impact on their pension credit and other benefits. This links directly to member concerns that there is a shortage of IFA prepared to offer advice on equity release who would be able to inform consumers of exactly what the impact on their benefits or estate would be. Despite the popularity of equity release members continue to have concerns over consumers’ poor understanding of the products.
Jon King, Chief Executive of SHIP commented: “The equity release market has come a long way over the past decade and has made very real strides in its attempt to rid itself from the scepticism that surrounded it in the early years. Equity release has never been cheaper, more accessible or- with full regulation imminent in 2007- safer. Modern drawdown products are a far cry from the inflexible, poor value products of the past.
“The findings from this year’s survey highlight the necessity for SHIP to continue advances made last year in promoting better advice to the consumer in 2007. Reassurance of the security of all products provided by SHIP members must be made apparent and more confidence needs to be instilled amongst the IFA community. The demand from the consumer for these products is clear, now it is up to the industry to ensure that they have access to appropriate, expert advice as well as great value products.”
