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Lifestyle factors drive equity release

While 2005 may be a year of consolidation for the equity release market as a whole, demand is clearly there. The challenge, as always, is to spot and court the potential clients.

On whatever scale of operation, marketing to these consumers is like marketing in no other sector.

The starting point is understanding why equity is being released. Our latest findings show that the top reason -and this has remained constant -is for home improvements, not so much essential repairs but rather people’s desire, having decided that they are not moving home, to turn their houses into the homes of their dreams. Ranking second is to pay for holidays. This is growing steadily, showing the little extras in life are important when clients consider equity release.

The third most popular use for the money is to pay bills or repay outstanding mortgages or debts. This is compounded for many by endowment shortfalls or simply the fact that they have mortgages or other debts in retirement which are adversely affecting their quality of life.

Another reason for releasing equity is to gift monies to children or other family members, and this is proving increasingly popular. More and more people are giving so they can even see inheritance being enjoyed in their own lifetimes, as well as to provide some help at the time they judge it to be most beneficial. Increasingly, funds are being given to children to help them get a foot on the property ladder.

While Inheritance Tax planning features as a top reason for equity release, its percentage might seem on the low side. But this reflects the fact that the link between equity release and Inheritance Tax planning is not yet established.

Most of those who give this as a reason do so with this idea of planning being set alongside other, more highly prioritised, needs. The IHT planning opportunity is typically being utilised alongside other priorities.

These statistics show that lifestyle is firmly at the heart of the demand for equity release and this information should provide clear guidance when attracting these potential clients. The table shows the top five reasons given for releasing equity.


Tortured figures will tell you anything

Just past the first anniversary of Mortgage Day, it’s time to bring a smile to the lives of my fellow brokers. Despite the views of those who wear rose tinted glasses, the past year has been a tough one for most brokers. So this week the focus is on the funny side of statistics.

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