The UK equity release market will grow over the coming years because more and more people will have to borrow to retire in the future, according to Just Retirement.
Equity release sales have grown since the introduction of pension freedoms last April. Before it merged with Partnership to form JRP Group, Just Retirement recorded equity release sales of £83 million in the first three months of the 2016, compared to £63 million last year.
The Financial Conduct Authority has also indicated it will review equity release rules to enable more people to take unlock the value of their homes when they retire.
Speaking at the Marketforce Future of Life and Pensions conference, JRP Group’s customer propositions director for lifetime mortgages Peter Borley said the market for equity release would continue to grow.
‘The market I believe is absolutely going to continue to grow,’ he said. ‘Everyone is starting to see that we are going to have to borrow to retire. So we are going to see more lending into retirement and I believe we are going to see a lot more products in the market.’
A number of providers have indicated their interest in the equity release market over the last year.
Last month Nationwide said it would design and launch a new equity release product in the coming months. Legal & General (L&G) also entered the equity release market last year.
However, Borley said Just Retirement was happy to see increased competition in the area because it made equity release more mainstream.
‘We actually like competition for two reasons. Firstly it will increase funding to the marketplace and therefore it does start to increase the amount of supply and make it more mainstream, and it does build the critical mass within the marketplace,’ he said.
‘The second thing is we love to see some great brands up there as well. It gives increased credibility to the marketplace and finally it brings in increased innovation to the marketplace as well. So when L&G entered the market a few months ago, we didn’t fear it, we loved it. And when Nationwide came to the market, we like to see that mainstream there.’
Source: New Model Adviser