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Brokers - tell me about the equity release market at the moment

Journalist: John Fitzsimons, Freelance

ended 24. October 2023

Morning brokers

Last week the Equity Release Council published figures around business levels for equity release at the moment, with H1 being the quietest since 2016 (https://www.mortgagesolutions.co.uk/news/2023/10/20/equity-release-sector-sees-quietest-h1-since-2016-but-signs-of-recovery-appear-erc/)

So we wanted to get some views on how the equity release market is performing at the moment:

  • What are interest levels like from borrowers? And what are the main factors driving that interest?
  • What is the level of choice like in terms of products? And how is the pricing compared to recent years?
  • How are the alternatives to equity release performing? Do you have referral relationships in place to pass over clients for whom ER is most appropriate?
  • Are there any specific improvements that lenders and those within the industry could make which would boost interest and take-up of equity release? How do you view prospects for the sector for the next couple of years?

Any and all thoughts on equity release are very welcome!

 

3 responses from the Newspage community

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Editor
Simon BridglandVerified
Director at Charwin Private Clients
Enquiries in 2023 have been generally needs based rather than aspirational. The increasing rates of traditional mortgages had seen the recipients of later-life mortgage gifts temporarily shelving their plans. Those releasing funds for their own purposes however are still present in the market. Very recently I have seen an increase in enquiries which I am putting down to consumer sentiment mixed with more needs based enquiries from those on interest-only deals which are ending now. Innovation is key in 2024 and lenders such as Livemore and More2Life are leading the way by being in tune with brokers and clients. Although rates are still a little high, other terms make deals look attractive, lower/short redemption periods and less restrictive terms for interest-only clients. Reference specifically to ER will dampen take up, a broader reference to later life mortgages and brokers who encompass all residential mortgage types offering non siloed advice will help boost confidence for clients.
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Rowan Frayling0
Managing Director at J Finance
We certainly saw a sizeable drop in enquiries at the start of 2023, with more interest lately. We are seeing an increase in those wishing to borrow to assist family, whether that be to move, or to reduce an existing mortgage balance.

We have seen less aspirational releases such as taking money for holidays and renovations and far more needs-based such as the above.

We work with a number of mortgage advisers who do not specialise in later-life lending to ensure they can still offer the full spectrum of solutions to their clients.

I think the public is adjusting to the rates we are seeing now for equity release, being typically 6-8% rather than the extreme lows of 2-4% we saw a few years back. Features such as the ability to pay the interest, redemption penalties that are fixed for a set number of years and so on, are all very helpful in the modern equity release market.
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Gareth DaviesVerified
Director at South Coast Mortgage Services
We've not experienced a drop in enquiry levels, but we've definitely seen a change in the reasons behind those enquiries. Whilst rates were spectacularly low we saw people looking at ER for more lifestyle needs. Holidays, home improvements, gifts to family etc. This year it has definitely been more needs-based, clearing an interest-only mortgage for example or needing to reduce outgoings because their SVR payments have gone too high.
ER products have continued to evolve for the better, and there is now much similarity to a standard residential mortgage, especially when it comes to redemption penalties etc. This helps the public get their head around the concept more easily.
Consideration of ER has now become more important for Financial Advisers, and since Consumer Duty, they are starting to be aware of the need to at least review the benefits of ER against other options. This is where we're able to help people in the industry who do not advise on these products themselves.