Equity release and the value of advice

21 June 2010

The equity release market is often compared with the mainstream mortgage market, including that for remortgages.

Yet the two markets vary considerably, and time and again statistics and events combine to confirm this.

One example would be the way the equity release market has contracted at a much slower rate than the mainstream sector.

Similarly, the fact that less than half the new mortgage products on offer are available via brokers stands in stark contrast to the experience in the equity release market.

The statistics for Q1 2010 highlight this trend, where sales via brokers accounted for almost 80% of the volume sold. And measured by plan numbers, almost 75% of new plans sold were via the broker channel.

Why is this? Well, perhaps the most important reason is Safe Home Income Plans’ requirement that clients seek financial advice before proceeding.

This has the benefit of ensuring that clients and their families understand the transaction, and contributes to the low complaint numbers in this product area.

This is a clear example of the value of advice and also shows how the challenge of the Retail Distribution Review might be approached.

 

If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat