Significant growth in the popularity of equity release is only a matter of time, according to Safe Home Income Plans (SHIP).
The number of consumers who have opted for property over pension as a means to supporting themselves throughout their retirement is an unequivocal indication that the equity release
market is set to increase in popularity, SHIP has said.
The comments are a response to a report by the Council of Mortgage Lenders
(CML), titled 'Please release me! A review of the equity release market in the UK, its potential and consumer expectations', which investigated why the equity release market in the UK has grown at a much slower rate than in other countries, such as the USA, Australia and New Zealand.
The CML's research found that this global split was mostly as a result of differing attitudes to equity release, due to social considerations in Australasia, where younger households are more comfortable drawing on their housing assets and less concerned about inheritance, and are rooted in Governmental guarantees in America, where consumers are protected against potential losses.
The report from the CML suggests similar popularity levels could be seen in the UK if there was more of a positive stance from the Government and more creative ideas about how to move the industry forward. Author of the report, Peter Williams said that "Looking at the wider context it is clear that equity release will continue to grow."
Equity release offers people of a certain age the opportunity to unlock cash from their home by taking out a loan or mortgage against the property's value which is repaid when the property is eventually sold after death or when the owner moves out. When people are asset rich but cash poor, it is seen as a way of increasing retirement income without having to move house.
Andrea Rozario, Director General of SHIP said: "The reality is that declining levels of private pension provision and meagre state pension benefits will drive more people in this country to explore alternative ways to top up their income in later life. Some will work longer, but a very large number are already planning to use the value in their property."
"All that is necessary for this sector to increase enormously in size is for consumers - and their opinion formers - to recognise the huge improvements that have been made to most equity release schemes."
She concluded: "It may well be the case that in the USA and Australia equity release is a more popular product than it is in the UK right now, but like flexible mortgages in the past, it does not mean we will not catch up in the future."
© Fair Investment Company Ltd