Most economists are now forecasting that the UK economy will grow by between 2% and 3% this year. The sustainability of the recovery is however subject to considerable uncertainty.
There is on the other hand no reason for concern about the future potential for the Equity Release sector. The size of the market over the first quarter of this year was an astonishing 35% ahead of the same period in 2013. According to the statistics from the Equity Release Council, the quarterly total is the highest since records began over 10 years ago.
Whilst in recent years the increasing share taken by flexible drawdown Lifetime Mortgages has normally been highlighted, over the past quarter there seems to have been a switch back to cash lump sum Equity Release plans which grew by a remarkable 50% year on year.
Even the Home Reversion market has returned to growth with the single quarterly figures being as much as two thirds of the sum raised throughout the whole of 2013.
The improved outlook for house prices has certainly encouraged consumers to be more confident about releasing money from their home. Another major factor has been the shift in retirement mortgages, particularly interest only, to the Equity Release portfolio as the traditional lenders have turned their backs on those at or in retirement.
Despite the banks and building societies losing interest in their ageing customers, it should not been forgotten that UK pensioners have more than £800bn tied up in their properties.* With life expectancy increasing to 18 years for men and 21 years for women from the age of 65**, the need to supplement the state pension will become urgent for many people, both for themselves and for their children who may not have been so fortunate in benefiting from such large rises in house prices.
The outlook for the Equity Release market as a whole is thus very promising irrespective of the level of GDP growth. In order to apply for an Equity Release Plan, it is a regulatory requirement that consumers receive financial advice before submitting an application. Bower have a team of specialist advisers who can explain to homeowners how Equity Release works, and if appropriate, make a recommendation for the most suitable option from the many Equity Release Plans and Interest Only Mortgages which are now available.