More people will look to equity release to fund retirement

Equity release looks set to become a more popular option to support retirement finances this year.

New research from more2life has found that 78% of advisers believe more of their customers will use equity release to support their basic retirement needs over the next year.

According to the research, 59% of equity release advisers also think that more clients will ask about releasing equity from their homes to boost their retirement income.

Understanding the potential uses of equity release in retirement is growing. The impact of the Covid-19 pandemic on retirement savings and incomes for older households is likely driving this rising interest.

Despite the expectations uncovered in this new research, 40% of advisers reported a fall in the number of equity release cases they advised since the start of the pandemic.

However, 36% of those advisers surveyed said they had supported more equity release cases since last March, and 26% of advisers saw no change in the number of equity release cases advised.

The survey also found that more than half of advisers have seen more clients using equity release to help younger family members onto the property ladder during the current stamp duty holiday.

34% of equity release advisers saw an increase in the proportion of clients using equity release to help relatives struggling financially, and 16% of advisers said clients were looking to support children or grandchildren more generally.

Another finding in the research was around a third of advisers saying they have supported a more significant number of clients using equity release to repay their residential mortgage.

More than a quarter said more customers were using equity release to refinance existing debts.

Dave Harris, CEO at more2life, said:

“The later life lending market is facing an interesting conundrum – we’ve worked hard to educate people on the role that housing equity can play in retirement, but we are also aware that, now more than ever, we need to encourage people to avoid knee-jerk reactions and make smart sustainable choices for both the long and short term.

“That almost 80% of advisers expect to see more customers looking to equity release to support basic needs in retirement during the next year is not surprising.   We have told them that later life borrowing is a safe viable option and people have listened.  What we need to do now as an industry is to ensure over-55s get high quality advice that helps them find the best solution for their specific needs – whether this involves an equity release mortgage or an alternative option.

“With a growing number of people turning to advisers for guidance on funding needs in retirement, the later life market must ensure that it continues to support advisers with the very best range of products and tools, so they are well-placed to support as many borrowers as possible throughout this turbulent time.”