Equity release lenders are rapidly expanding options for customers underlining the necessity for advisers to stay on top of new product development, data from Key Partnerships, the equity release referral service for the UK’s leading specialist adviser Key shows.
Lenders now offer 221 plan options across their product ranges – an increase of 300% in just three years - highlighting the rapid development of the market in response to the growth in new lending to more than £3.6 billion last year.
The increase in the number of products has grown significantly in just the last 5 months with Key Partnerships’ data from its last report in October highlighting that lenders offered 144 plan options at the end of Q3 2018. Whereas close to the end of Q1 2019, there are 221 products on the market an increase of 53%. Product changes from the lenders serving the market have included offering different LTVs on plans to providing more fee-free options.
| Year |
Number of equity release plans on the market |
| Quarter 1 2019 |
221 |
| Quarter 3 2018 |
144 |
| Full Year 2017 |
86 |
| Full Year 2016 |
73 |
At the core of the market development are series of major innovations analysed by Key Partnerships including downsizing protection; allowing interest payments; allowing ad-hoc repayments; offering fixed repayment charges; protected inheritance options; offering drawdown and lending on sheltered or age restricted accommodation.
Its figures show 48% of plans currently offer the option of downsizing protection if customers want it while 20% enable customers to pay interest on loans and 27% of the current product range offer drawdown facilities.
Around 35% of plans available will lend on sheltered or age-restricted properties while 57% allow one-off repayments. Advisers also have a decision to make on early repayment charges – around 39% of plans have fixed charges while the rest are variable.
| Product Features |
Percentage of products with these features |
| One off repayments |
57% |
| Downsizing protection |
48% |
| Fixed early repayment charges |
39% |
| Lend on sheldered or age-restricted properties |
35% |
| Drawdown facility |
27% |
| Interest payments |
20% |
Jason Ruse, Head of Key Partnerships said: “Customer demand is transforming the equity release market and lenders have launched a range of new products with innovative features to meet customer needs. This is highlighted by the fact that the number of equity release plans has increased threefold in as many years.
“Although, some of the new plans have incorporated small but significant tweaks to an existing plan, it does mean there are now 221 variations available on the market. It also means that there are major innovations and new options for customers and their advisers to be aware of.
“Some customers may be interested in releasing the maximum amount from their property while others will be interested in the range of innovative options available to them.
“Taking into consideration all the recent product innovation, It’s really important that advisers who do not have the time or qualifications or feel that their knowledge is not up to date enough, should seriously look at setting up a referral relationship with a specialist. Expert independent support from specialists is becoming more vital as the market grows and continues to innovate.”
