The demand for equity release products has been increasing steadily over the last 12 months.
Equity release can be defined as the transfer of an interest in your property to a third party in exchange for a cash sum or a monthly income. You receive the cash but continue to live in the property.
The Equity release lender will recover the money it has lent you either by selling your property after your death or if you sell your property – for example to move into a care home.
There had been a slight drop in sales of the product recently due to the initial shock for the consumers of the credit crunch. However this is likely to be a temporary blip. Demand is now rising again as the benefits of equity release are understood by potential consumers.
Following the changes that have occurred in the wider mortgage market over the last 6 months, equity release business has performed well and have been much more resilient than the mainstream market. This is a pointer to the increased focus lenders and intermediaries will place on equity release going forward.
The demand for equity release is likely to grow significantly further over the coming years as all the hallmarks are in place for this type of lending to flourish. We have an ageing population, a decline in pension provisions and a great deal of consumers wealth tied up in property. Equity release will fair well moving forward regardless of what the mainstream mortgage market does.