The Younger Customer Will Push Equity Release to the Next Level

Being part of an exciting and evolving market makes anyone’s job easier. Over the past few years, the equity release industry has been changing and improving rapidly. We are set for a record £4 billion lending this year and more products have been launched over these past few years than ever before. But, one of the most interesting and perhaps significant recent changes has come from within our customer base.

When most people think of equity release customers, they probably think of an elderly person who may be asset rich but cash poor. And this is often correct. The lifetime mortgage is often well suited to those who need to convert assets into liquid funds in later life. However, this isn’t all equity release can do as more and more younger customers at pre-retirement are now looking at lifetime mortgages.

Firstly, and perhaps most obviously, building a base of younger customers means one simple thing – more customers. According to market and consumer data portal Statista, the UK population of 55 – 59 year olds in 2020 was a shade over 3.7 million, which also represented the second largest age bracket after 50 – 54 year olds at 3.8 million. Whereas when we jump up to 75 – 79 year olds this crashes down to just 2 million[1]. Essentially, there are nearly double the amount of potential clients in the 55 – 59 bracket, and there are even more coming in the next few years. If equity releases can start servicing the needs of these younger age brackets more consistently, then the industry will soon hit new heights.

Secondly, attracting a new and younger customer base will also add significant credibility to our wider industry. For too long equity release has been written off in the mainstream press and by our naysayers as ‘a last resort’. So, If we can show that the lifetime mortgage is working for people across a 30+ year age range, the doubters may have their heads turned.

Thirdly, a growing younger customer profile will also tempt more lenders into the market. Having diversity and options will be the best way to draw in more high street lenders as they too will realise that equity release is a strong and growing market that can help both young and old.

And finally on this point, as we get to a stage where both 55 year olds and 85 year olds can benefit from the lifetime mortgage equally, the next goal will be to expand the product suite available. As I mentioned in the introduction, more lifetime mortgages have been launched in recent times than ever before – a fresh equity release product was launched every 28 hours in 2020[2] – but with a growing younger customer base this will have to accelerate even more. Younger clients will need different products tailoring to their needs, so the entire industry needs to be ready to kick things into overdrive.

Overall, the equity release industry is going to be perfectly placed to aid the oncoming retirement finance crisis. Pensions and savings simply will not stretch far enough to cover a retirement that will last, on average at least, far longer than ever before. Tapping into historic property wealth increases will be the key to a comfortable retirement for millions, whether that be through remortgaging, downsizing or equity release. And for more people this decision will come earlier in life as they look to enter their retirement with finances and retirement plans firmly in place – and our industry could and should be somewhere they explore thoroughly.