Abstract
About this report
There have been many false dawns for the equity release industry, with many predictions that ' now is the time for the market to take off' . Given an ageing population and ever-rising house prices and the over-55s accounting for a growing percentage of household wealth in the UK, such views were understandable. So far, this take-off phase of market development has failed to materialise and the credit crunch seems hardly an auspicious moment for a finance market to spring into the future.
And yet, despite falling sales of equity release plans in 2008 (and a further decline likely in 2009), the equity release market is showing a resilience that the wider mortgage market can only dream of. The fact is that the foundations for the take-off of the market are now firmly in place, especially now that the market is fully regulated and tighter regulation is planned for the sale-and-rent-back market. There is also evidence that equity release is being boosted in the recession by many over-55s using it to generate income now that the returns on their savings and investments have been hit by low interest rates.
Drawing on a comprehensive range of information sources, this report considers all these issues and additionally offers an investigation into the internal and broader macroeconomic factors impacting on the market, including changing social and demographic trends, an overview of the market' s competitive context, its strengths and weaknesses, insights and opportunities and the results of Mintel' s independently commissioned consumer research. This research offers insight into the leading characteristics, attitudes and behaviours of homeowners and (actual and potential) equity release customers.
Key issues
- The credit crunch has caused a steep recession in the UK, leading to a sharp decline in house prices and interest rates falling to record lows. Will the crunch cut demand for equity release by reducing the equity in homes, or boost demand because of the decline in income felt by the older unemployed and those living on savings?
- Full regulation of equity release products led to a major upturn in demand for certain products but was this a one-off event or something more permanent?
- The FSA is now set to regulate sale-and-lease-back schemes and this could have a positive impact on the equity release market. Equity release in some consumers' eyes has been tarnished by the same brush that led to a poor perception of sale and lease-back.
- Consumer research has indicated that currently equity release has scarcely scratched the surface of the potential market for equity release plans. What is needed to push penetration deeper?
Table of Contents
- Issues in the Market
- Key issues
- Market background and definitions
- Lifetime mortgages
- Shared appreciation mortgages (SAM)
- Home reversion
- Regulation
- SHIP
- Taxation and benefit issues
- Abbreviations
- Market in Brief
- The market falls but is weathering the crunch well
- Figure 1: Total value and volume of new equity release sales, by SHIP
members, 1997-2009
- The future is bright
- Drawdown mortgages drive the market as consumers opt for flexibility
- Figure 2: The breakdown of the sales of equity release plans, by type of
plan sold, 2006-09
- Providers respond with new products
- Norwich Union and Prudential dominate the market
- Figure 3: Estimated equity release market share+, 2008
- An intermediary-led market
- Providing an income in retirement the top reason for releasing equity
- 13 million potential targets but 6.6 million to really aim at
- Figure 4: Key sales targets for an equity release offer among homeowners
aged 45+, January 2009
- Internal Market Environment
- Key points
- Tighter regulation
- Regulation in Europe
- Not enough brokers
- Constant monitoring
- Still a lack of high street banking names...
- ...and past misdoings still taint the industry' s image
- Sale and rent-back risks doing further damage...
- ...but tighter regulation is on the cards
- Asking the industry
- A lack of support from the government
- Equity release and IHT
- Broader Market Environment
- Key points
- The old shall inherit the country...
- Figure 5: Population breakdown, by age (million), 2006-30
- ...as people live longer and spend longer in retirement
- Figure 6: Life expectancy (years) or males and females aged 55+, by
current age, 2005-07
- Implications
- The GOTYs are on the march
- Figure 7: Seniors with a young outlook on life, May 2008
- Figure 8: The areas over-65s want to spend more on, May 2008
- Lifestyle factors the main motivator for equity release
- Figure 9: The main motivation for taking on an equity release scheme
among Key Retirement Solution new business customers, 2007 and 2008
- The correct targeting of equity release schemes is needed
- Figure 10: Classification of over-65s (000), by their financial
situation, April 2008
- Increasing retirement age
- More older owner-occupiers
- Figure 11: The number of owner-occupiers aged 60+, by age, 2006-26
- More housing wealth for seniors...
- Figure 12: The housing wealth for adults aged 60+, by age, 2006-26
- ...but the decline in housing prices will have a short-term impact
- Figure 13: Average mix-adjusted UK house prices (£), Feb 2002-Feb 2009
- Falling interest rates
- Implications
- Loss of lending capacity
- Competitive Context
- Key points
- The key alternatives
- Figure 14: Alternative sources of retirement income
- Buy-to-let
- HEW and remortgage
- Figure 15: Housing equity withdrawal (seasonally adjusted), Q1 2000-Q3
2008
- Downsizing
- Sale and rent-back
- Strengths and Weaknesses in the Market
- Figure 16: Equity release products -- strengths and weaknesses in the
market, 2009
- Market strengths
- Remaining in the home and tenure
- Competitive products cannot generate income
- Equity release market now fully regulated
- Rapidly ageing population
- Weaknesses
- Equity release can be limited
- Requires capital
- Credit crunch
- Potential shortage in the number of qualified advisers
- Market Size and Forecast
- Key points
- The crunch bites but not too hard
- Figure 17: Total value of new equity release sales by SHIP members,
1991-2009
- Average value of loans in decline as the number of new sales also dips
- Figure 18: Total volume of equity release sales and average value of
loan, by SHIP members, 1997-2009
- Figure 19: The annual percentage change in new business value and plans
sold, 1998-2009
- Forecast
- Figure 20: Equity release forecast, 2004-14
- Long-term growth likely
- Factors used in the forecast
- Segment Performance
- Key points
- Drawdown mortgages the growth sector
- Figure 21: The breakdown of the sales of equity release plans, by type
of plan sold, 2006-09
- Lifetime mortgages now hold 97% of the market
- Figure 22: The value and volume of new lifetime mortgage sales, 1997-2009
- Falling average values
- Figure 23: The average value new lifetime mortgage sales, 1997-2009
- A tough time for reversion products
- Figure 24: The value and volume of new reversion plans, 1997-2009
- Market Share
- Key points
- A new order in the market
- Figure 25: Estimated equity release market share+, 2008
- Companies and Products
- Key points
- Flexibility and simplification
- Norwich Union revamp
- LV= Flexible Lifetime Mortgage
- LV= age banding
- Lower rates
- Figure 26: Examples of the rate charged on lifetime mortgages, April 2008
- Marginal falls in loan to value
- The big banks: can' t play, won' t play
- Profiles of the main providers
- Norwich Union Equity Release Limited
- Prudential plc
- Just Retirement Solutions
- In Retirement Services
- New Life Mortgages
- Hodge Lifetime
- Profiles of other providers (ranked alphabetically)
- Bridgewater Equity Release (Granger Plc)
- Coventry Building Society
- LV=
- Milton Homes (Retirement Plus)
- National Counties Building Society
- Northern Rock Plc
- Partnership Home Loans
- Saffron Walden Building Society
- Sovereign Reversions Plc (Home and Capital)
- Stonehaven
- Profiles of major advisers
- Age Partnership
- Key Retirement Solutions (KRS)
- Equity Release Solutions
- Brand Communication and Promotion
- Key points
- Main media spending rising
- Figure 27: Main media spending on equity release plans, 2004-08
- Direct mail the dominant form of promotion
- Figure 28: Main media spending on equity release plans (£000), by media
channel, 2004-08
- Aviva continues to spend the most on advertising
- Figure 29: Top ten equity release advertisers, 2004-08
- Channels to Market
- Key points
- Intermediary sector of growing importance
- Figure 30: Breakdown of value sales of equity release products from SHIP
members, by distribution channel, 2003-09
- ...and now responsible for almost two thirds of plan sales
- Figure 31: Volume sales of equity release products from SHIP members, by
distribution channel, 2003-09
- Intermediaries sell almost 18,000 plans in 2008
- Figure 32: Volume and value sales of equity release products from SHIP
members, via intermediaries, 2003-09
- Direct sales falling close to £200 million
- Figure 33: Volume and value sales of equity release products from SHIP
members, via direct channels, 2003-09
- More than a third say they had or would seek the help of an adviser
- Figure 34: Agreement with statements about arranging equity release,
February 2008
- Search for wider distribution
- LV= and Intrinsic
- Key Retirement Solutions Premier Partners
- Intermediaries are getting more support
- The Consumer -- The Target Market
- Key points
- Almost 13 million potential targets
- Figure 35: The number of over-55s owning their home, January 2009
- Affluent adults more likely to have equity but don' t ignore the less
affluent
- Figure 36: The percentage of over-55s owning their home, by
socio-economic group, January 2009
- Most over-55 homeowners are reasonably comfortable
- Figure 37: Home ownership, by ACORN group, January 2009
- Use of equity release has barely scratched the surface
- Figure 38: The equity release market, by age, January 2009
- Less affluent adults constitute over 50% of the market...
- Figure 39: The equity release market, by socio-economic group, January
2009
- ...and an ample supply of potential new customers in the next 20 years
- Figure 40: The proportion of homeowners, by age, January 2009
- Mortgage debt to decline for potential equity release targets
- Figure 41: The average length of time before a mortgage is paid off, by
age group, January 2009
- The Consumer -- The Uses of Equity Release
- Key points
- Immediate needs drive the market...
- Figure 47: Reasons for releasing equity, 2008 and 2009
- ...but a different set of priorities for the key targets
- Figure 48: Reasons for releasing equity, by target group, January 2009
- Implications and opportunities
- Lifestyle factors more important for adults pre-retirement
- Figure 49: The main motivations for taking out an equity release plan,
by age and lifestage, January 2009
- Implications and opportunities
- C1C2s focused on income generation
- Figure 50: The main motivations for taking out an equity release plan,
by socio-economic group and ACORN group, January 2009
- Appendix -- The Consumer -- The Uses of Equity Release
- Figure 64: The main motivating factors for taking out an equity release
plan, by demographic sub-group, January 2009
|
相關報告
|
