Stuart Wilson offers some key insights into equity release and later-life lending.
1. Fastest growth
Equity release is the fastest-growing mortgage sector, displacing buy-to-let remortgages for the first time last year. The market has had double-digit growth for five consecutive years and could break through the £3bn barrier in 2017 after more record numbers reported in H1 by the Equity Release Council.
2. Retirement lending boom
The wider retirement lending market (all lending to those aged 55+: credit cards, personal loans, residential and lifetime mortgages) is booming, being worth £65bn annually and set to reach £142bn by 2027, according to research commissioned by More 2 Life earlier this year.
3. Debt in retirement
More and more consumers face debt in retirement. Our research shows that the average 65-year-old has outstanding mortgage debt of at least £40,000 and credit card debt of £5,000–£10,000. Last year, growth in unsecured debt among the over-75s was higher than for any other age group.
4. Younger customers
The average age of the typical equity release customer is falling, with the fastest-growing cohort the under-65s. This is largely driven by the increase in maturing interest-only mortgages that customers are unable to repay due to a lack of suitable savings.
5. Housing wealth
The over-65s control around £2tn of housing wealth. The equity release market could grow to at least £5bn by 2020, due to the ageing population, more reliance on housing wealth as DB pension schemes fade, rising interest-only mortgage debt and a more holistic approach to retirement planning resulting from the pension freedoms.
By Stuart Wilson, channel marketing director, More 2 Life