Despite seeing a significant uplift in enquiries this year, Equity Release Group (ERG) warned that even with current industry confidence, the later life market may take years to recover from recent turbulence.
The ERG’s lead volume rose by 102% in the year September, while lending applications were up 52% in comparison to the same period last year.
Recovering house prices earlier in the year had a widespread effect on the sector, with ERG stating that some of the increase was down to retirees exploring their options after years of rising costs, as well as impending tax changes.
The 2024 Autumn Budget will be one of the most closely watched in recent years, as Prime Minister Keir Starmer and Chancellor Rachel Reeves have indicated that tough measures lie ahead.
ERG noted that nervousness around this announcement and the implications for those planning their retirement mean people are reviewing alternate funding options to support their later life goals, some of whom are turning to equity release as a potential solution.
Mark Gregory, founder and CEO of Equity Release Group, said: “Whilst we’re seeing a marked improvement within the industry, alongside our current data, which reflects optimism and demand, there is still some way to go before the market fully recovers and will likely take a few years.
“The [Budget] is likely to bring financial planning and life goals sharply into focus with potential tax reforms on the horizon, particularly around Capital Gains, Inheritance Tax, and pensions.
“However, releasing property wealth is a tax-free source of capital for many in need of options, outside of a traditional pension or other savings.”
ERG also reported heightened usage in Q3 of customers utilising monies released from ‘additional borrowing’, which was up 5%, as well as usage for ‘emergency funds’ which grew 2.5% – both of which could be reflective of the current market sentiment.
Repayments on residential property mortgages increased, but ‘gifts to family’ decreased, suggesting that people are in need of more readily available cash for existing financial needs as opposed to longer term goals.
Gregory added: “Our recent Q3 data has highlighted that our customers, more so than ever, have a need to compare later life lending products accurately for the best rates, features and overall solutions that meet their personal requirements.
“Therefore, expansive technology features, alongside independent and whole of market advice, are vital to meet consumer demands in line with Consumer Duty.
“We have spent copious amounts of time driving efficiencies within the business. An area of which has been the compelling reduction in our lead costs.
“Implementing a more productive marketing and engagement strategy has enabled us to produce double the number of leads with an 85% reduction in budget without changing our core customer journey which is based on transparency, choice and independence.”
He added: “Our aim is always to push for greater accessibility, transparency and make it easier for people to explore all their equity release options, comparing the market, rates, features and gaining access to whole of market, independent, quality advice.”
