New research from the Centre for Economics and Business Research (Cebr) commissioned by equity release lender, more 2 life, has revealed that the later life lending market is set to almost double in size over the next decade due to demographic and lifestyle changes.
Josie Dent Senior Economist, Cebr says: “We also forecast future debt levels of people aged 55 and over, finding a significant increase in the amount people near, or at, retirement age will owe over the next ten years.
“After a decade of fast rising property prices, many cannot afford to buy a house until they are in their thirties or forties, leading to a rising number of people who will be entering retirement in the coming years with mortgage debt still to pay off.
“Furthermore, an ageing population means that in ten years’ time there will be significantly more people aged 55 and over than there are now, further increasing the total size of the debt market for older people.”
Another reason why later life lending is set to grow is due to many over 55s releasing equity from their homes in order to fund their retirement lifestyle.
Dave Harris, chief executive officer (CEO) at more 2 life, says: “Later Life lenders have stepped up to this challenge and we are seeing increased flexibility as well as a wider choice of products designed to cater for today’s retirement lending market.
“However, we must ensure that we do not become complacent and with growing numbers of consumers interested in how they can access their housing equity, it is up to us to lend a helping hand to ensure they are able to enjoy the retirement they deserve.”
Is equity release right for everyone?
Victoria Hicks, director of City & Capital Acquisitions says: “There are many reasons to consider equity release, particularly when facing a shortfall in retirement, or if leaving an inheritance is not a priority. With many over 55s owning property – and sitting on lots of equity – this approach is becoming more popular.
“With the ability to remain in your home, and a no negative equity guarantee it is clear why popularity in mounting. The market is adapting to consumer’s needs too, with Drawdown Lifetime Mortgages allowing you to store some of the release in a trust until you want it – and only then does interest start to accumulate.
“Given the average personal pension pot at retirement is still sub £50,000, and many have experienced significant growth in property prices, it is no wonder the Equity Release Council expect to continue to see significant growth in this market. The improvements in legislation and flexibility should also really benefit consumers.”