Equity Release Group highlights that despite growing confidence, a full market recovery is still distant.
- ERG’s enquiries increased significantly, with a 102% rise in lead volume and a 52% boost in lending applications.
- Recovering house prices have prompted retirees to reconsider financial options due to anticipated tax changes.
- Nervousness looms ahead of the 2024 Autumn Budget, making equity release an appealing alternative.
- Customers are increasingly comparing later life lending products for the best rates and solutions.
The Equity Release Group (ERG) has noted that while there is a palpable increase in confidence within the later life lending industry, a complete recovery remains a long-term prospect. This perspective arises despite a marked increase in enquiries and applications for lending products, underlining the industry’s complexity and the challenges hindering rapid recovery.
ERG’s data for the year leading up to September shows an impressive 102% increase in lead volume, coupled with a 52% rise in lending applications compared to the previous year. Such figures suggest optimism and demand are present, yet the headwinds from recent turbulence in the market necessitate cautious optimism about the future.
The surge in enquiries is attributed partly to recovering house prices earlier this year, which have led many retirees to explore their financial options more thoroughly. This is also influenced by potential tax changes anticipated in the upcoming 2024 Autumn Budget, a notable event given the statements by Prime Minister Keir Starmer and Chancellor Rachel Reeves who have indicated tough financial measures ahead.
As these announcements are keenly awaited, there is a palpable anxiety among those approaching retirement as they seek to mitigate risks associated with potential tax reforms on Capital Gains, Inheritance Tax, and pensions. Many see equity release as a viable, tax-free alternative for unlocking property wealth, providing a cushion against economic uncertainties.
Mark Gregory, ERG’s CEO, emphasised the significance of these developments, noting that despite improvements, the market’s full recovery will likely take years. He pointed out the importance of the upcoming budget, as tax reforms could dramatically shift financial planning and life goals, underscoring the importance of alternative funding solutions.
Additionally, ERG reported increased usage of funds from ‘additional borrowing’ and ’emergency funds’, which reflects a cautious approach among customers responding to current market conditions. While mortgage repayments have increased, the decrease in ‘gifts to family’ suggests a prioritisation of immediate financial needs over longer-term aspirations.
Gregory highlighted the need for comprehensive technology and independent advice in the current environment. The company’s efforts to streamline operations have resulted in a dramatic reduction in lead costs by 85% without altering the core customer journey. This has been achieved through innovative marketing strategies, aimed at enhancing accessibility and transparency.
These strategies are crucial as customers are advised to thoroughly compare later life lending products to find the best rates, features, and solutions that align with individual requirements.
The Equity Release Group anticipates that while positive trends are emerging, the market’s full recovery will take several years.
