Photograph of Andrea Rozario, the author of this document.

Pent Up Demand for Equity Release

What’s going to happen once this is all over? Well, If I knew that I don’t think I’d be writing this column, but I, like you I am sure, cannot wait for some semblance of normality to return. I don’t think many people would have predicted a year ago that we’d still be in lockdown, so I am certainly not going to tell you that I know where the next turn in this tale will take us – but I do get a sense that we are approaching the final furlong and the end is in sight.

For our industry, what can we expect from the months following the lifting of lockdown? First, and I think this will be true of almost all parts of the economy, I expect to see something we all need – activity.

I think there will be such a rush of positivity and a release of energy that things will be busy everywhere. Equity release, like so many other industries has had, on the face of it at least, a challenging time of it throughout the pandemic. But it certainly could have been worse. After a fourth quarter rally, the annual lending figures even in a Covid-affected year still all but matched 2019 numbers (£3.89bn in 2020 versus £3.92bn the year before).

Once normality returns, however, I think we will be back on track to consistently increasing these annual totals. If you just look at the increase over the last six years or so – we’ve gone from £1 billion of lifetime mortgages agreed a year to surpassing that in a single quarter now – to match recent totals in a time as strange as these is actually rather impressive, and for me implies that there is serious pent up demand for our products.

For example, taking a closer look at the reasons people are releasing their equity is revealing. Recent research has spotted a growing trend of older customers using equity release to pass on gifts to their families and loved ones. In fact, 23% of customers over 75 state that they are using the money they release to help their family with things like a deposit1. So, when so many aspiring homeowners have been hammered by the economic impact of coronavirus, it is great to see that our customers (who may well have stopped working) are willing to reach out with a helping hand. Once we are free of Covid, or at least the restrictions it puts us under are lifted, I can see this trend continuing as older family members realise that helping their loved ones is something that can bring them great happiness and level the playing field once more.

Beyond this, I do think many older people, who we must remember have also been hugely impacted by this virus and sacrificed just as much if not more than their younger counterparts, will also look to their property wealth to help them put together the life and surroundings they want. Things like home improvements and renovations, which are always high up on the list of reasons people use lifetime mortgages, will surely increase as tradesmen and workers are allowed out once again to freely ply their trade. Plus, I would also expect that using equity release to fund things like trips and life experiences will also grow. Customers will think to themselves that the last few years have brought things into stark perspective – so, why not? And, for those that equity release is the right fit, I think we will see a surge of people thinking that the time is right for them.

Ultimately, I am not sure when this will be over and neither is anyone really. It’s been a tough 12 months or so but I am confident that we will get there soon.

For every single industry imaginable, getting back out there and returning to some kind of normality is so important. For mortgages and equity release in particular, I am sure that when we do get to the point that restrictions are fully lifted, we have the products, the advisers and the safeguards to make sure that people can have all the options and choices they deserve.