The report stated that a combination of under-funded pensions, low annuity rates, demographic issues and pensioner debt, along with historically high levels of equity in the housing stock, made equity release an increasingly important alternative for retirement planning.
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David Black, Defaqto’s head of banking and author of the report, said: “A number of factors are coming together which will make equity release an increasingly sought-after retirement solution for many people.
Although it remains essential that people explore alternatives to equity release as well as its possible implications; equity release will become an increasingly relevant option in future retirement planning. It clearly won’t suit everyone but it will increasingly provide a solution for many people.”
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Jon King, chief executive of Safe Home Income Plans, said: “The challenge the industry faces is getting over to the public generally that equity release is a good value product. If you look at equity withdrawal, it is a normal part of financial planning and when the generation doing that now in their 50s work through to being eligible for equity release, it will move into the mainstream.”
Peter Fisher, director for NHFA, added: “Lenders are putting a lot of resources into equity release, as they see it as a great, untapped market. The difficulty is getting it to pay, as it is competitive. While interest rates are generally going up, their rates are coming down.”
