Annuity-funded providers dominate market

Equity release advisers will be relieved that to date, a full range of products is still available to their clients at attractive interest and loan to value rates.

But the difficulties in financial markets are changing the shape of the overall sector in that the annuity-funded providers have moved into the ascendancy. It is estimated that such providers now account for over 70% of the equity release market.

The symmetry between annuities and equity release is particularly striking in that the prospective return to the provider is related to the life expectancy of clients in or approaching retirement. Moreover, receipts from the sale of annuities can generate the finance for equity release plans with lifetime mortgages offering a secure asset and long term income potential for providers with no affordability issues.

With an increasing age profile of the population underpinning the demand for both types of retirement product, it is reassuring that the growth of annuities and equity release can complement each other at a time of funding constraint elsewhere in the economy.