14th March 2016
The equity release market is responding to increasing demand from elderly homeowners looking to unlock cash from their homes with a wider range of products and options, according to new research by Moneyfacts.co.uk
The analysis, which focused on the current offerings available in the equity release market, found that there are now 70 different lifetime mortgage equity release deals available covering a wide range of options and loan-to-values (LTVs), an increase of 34% on the number of deals available last year and more than double the total number from three years ago (see the table below).
A significant trend has developed in which higher LTVs are increasingly offered, with 38 lifetime mortgage deals now offering LTVs at 50% or above, depending on the customer’s age and/or health. The maximum LTV now available is as high as 55.5%.
There has also been growth in the number of providers offering the option to make capital repayments, with five providers now offering this flexibility compared with just one provider two years ago. Borne out of the desire to circumvent the MMR affordability rules, which have affected interest served lifetime mortgages, the option to pay off capital (typically 10% per annum) has become more widely available and is expected to become a standard feature on equity release products before too long.
|Number of deals at 50% LTV or above||9||13||15||21||38|
|Total number of lifetime equity release deals||47||33||41||52||70|
Richard Eagling, editor of Investment Life & Pensions Moneyfacts, said: “One of the most impressive characteristics of the equity release market has been the extent to which innovation has enabled its products to evolve.
“Flexible options such as drawdown facilities and the ability to service debt, combined with the Equity Release Council’s rigorous standards that govern the provision of advice and products, have transformed the equity release market and ensured that today’s products are a world away from the offerings that tarnished the reputation of the sector in the 1980s.
“Our latest research suggests that the equity release market is responding to growing demand and with new funders set to enter the sector this year, we expect the range of equity release solutions to continue to increase.”