Global equity release market forecast to hit $50bn by 2033

The European Pensions and Property Asset Release Group (EPPARG) and EY have predicted that the global equity release market could hit $50bn (£39bn) by 2033, more than doubling its current size.

The forecast was made in the Global Equity Release Roundtable 2023 survey report, which gathered data from market leaders across 13 countries globally with established or developing equity release markets.

The report found an increasing need for the product given the cost-of-living crisis and higher inflation.

Among the countries analysed, over $17bn (£13bn) of equity is currently released each year for homeowners, but this was projected to increase dramatically by 2033.

Banks were the most common source of financing for equity release mortgages globally, followed by insurance companies, securitisations and debt.

The most common type of equity release was the lifetime mortgage, available in the majority of countries covered by the survey, followed by home reversion schemes.

Equity release products were typically available to customers from the age of 55 or 60 years old, with a mix of fixed and variable rates offered.

The most popular product globally was the lump sum, with annuity and drawdown products available in a number of countries.

The most significant factor cited as impacting equity release pricing was interest rates, followed by funding costs and availability.

A lack of customer awareness was the primary barrier to growth, followed by insufficient funding, notably in European markets.

Steve Kyle, secretary general of EPPARG, said: “We are very much encouraged by the results of our latest survey, which confirms that equity release has an increasing role to play at global level in allowing elderly homeowners to draw on their own home as an asset to finance a decent and comfortable retirement.

“We will be continuing to build awareness of equity release products internationally in view of the significant social and economic benefits that they bring.

“In Europe, I am pleased to say that we are seeing a number of new innovative start-ups entering the market, which is still nascent in some countries, with a range of business models designed to offer new financing options to elderly homeowners.

“At EPPARG, we also advocate a clear focus on ensuring high standards, such as our own EPPARG 10 standards in Europe, for both lifetime mortgages and home reversion products.

“Our goal is to foster an enabling environment which will allow the global equity release market to reach its full potential, as a safe and attractive option for investors and elderly homeowners alike.”

Ben Grainger, partner at EY, said: “Supporting growth in the global equity release market has the potential to transform thousands of people’s retirements, and it is positive to see such strong momentum currently.

“Unlocking the global potential further will require deeper cross-border collaboration, achieved by sharing funding models, sources and best practice customer standards.

“Progress is happening, and we look forward to working with our clients around the world to grow and develop this market.”

David Burrowes, chairman of the UK Equity Release Council (ERC) and EPPARG Board Member, said: “This survey resonates with the Council’s understanding that growth of the market and unlocking property wealth to support the growing needs of later life consumers’ needs greater customer awareness.

“Maintaining and increasing consumer confidence needs to be based on standards and innovation which support good consumer outcomes.”