Data shows 300% rise in equity release options in just three years

Equity release lenders are rapidly expanding options for older home owners, with the number of plan options up 300% in three years, according to new research.

Lenders now offer 221 plan options across their product ranges, 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 five months, a rise of 53%, with new data from Key showing it was just 144 plan options at the end of quarter the third quarter of 2018.

Product changes from the lenders serving the market have included offering different LTVs on plans to providing more fee free options.

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 and around 39% of plans have fixed charges while the rest are variable.

‘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,’ said Jason Ruse, head of Key Partnerships.

‘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,’ he pointed out.

‘Some customers may be interested in releasing the maximum amount from their property while others will be interested in the range of innovative options but all will want to release wealth in the most efficient way for their individual circumstances,’ he explained.

He also pointed out that advisers need to keep up with product changes, especially as so many updates have happened within the last few months and particularly for advisers who do not regularly handle cases.