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Brokers poised for an equity release bonanza

As the recession continues to take its toll, consumers are increasingly turning their attention to ways of boosting their income and it’s no surprise that equity release is on the agenda for many.

The good news is that according to trade body Safe Home Income Plans, home owners releasing equity from their properties to supplement their income can expect plans to become cheaper.

SHIP says that 67% of equity release providers predict that interest rate reductions on the plans will increase their popularity in the next few months.

And more than 90% of equity release providers believe their volume of new business will increase in the next 12 months, with the decline in costs being a Meanwhile, Key Retirement Solutions thinks equity release could be a solution to the growing problem of funding long-term care at home.

With the number of individuals over the state pensionable age on the rise, the need for funding of long-term care has never been so pressing.

Research by Hodge Lifetime reveals that 73% of advisers expect to see interest from consumers in the equity release market increase in the next three months.

So are we about to witness the next big thing in the mortgage market – or should I say the only big thing?

Those in the know and without a vested interest correctly maintain that taking out an equity release plan is a serious step and one consumers must get right, ensuring they understand all the charges involved.

In fact, an equity release deal is not something individuals should jump into without understanding all the implications, and falling property values could mean little inheritance for families in the future.

These deals involve long-term commitment and although interest rates are low at the moment, that will not always be the case.

So it seems there’s an opportunity for mortgage brokers to diversify into the equity release market at this stage but like most things in business, timing is everything for those wanting to maximise the financial returns on such a move.

Hodge says 58% of advisers expect consumer confidence to decline in the coming months if uncertainty in the banking sector continues.

Meanwhile, 42% are concerned that falling house prices are wrongly being portrayed as detrimental to equity release choice.

Two-thirds of advisers are concerned about the negative impression of the equity release market being portrayed in the national media and 88% believe positive coverage would act as an important catalyst for boosting the sector.

Of course, the consumer press is notoriously fickle and loves bad news stories, but if the equity release industry can successfully crank up its PR machine and position itself as a viable option there are rich pickings to be had in the next year or so, and possibly beyond.

Despite falling house prices and a lack of public understanding of equity release products, it could make a lot of sense for many consumers as well as providing an invaluable income stream for mortgage brokers.

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