Research from equity release lender, more2life, shows that 78% of advisers think more of their customers will look to equity release to support basic retirement needs over the next year. 

According to the study, 59% of advisers think a larger number of their clients will enquire about equity release so they can add to their retirement income over this period. Factors such as the impact of Covid-19 on pension pots, careers, and incomes of thousands of older households across the UK is likely to be what’s spurring this interest.

Impact of the Covid-19 pandemic on equity release cases

The study’s findings come even though 40% of advisers reported a drop in the number of equity release cases they have advised on since the start of the crisis compared to the number they would usually advise on before Covid.

 Interestingly, 36% of advisers said they have supported more equity release cases since the onset of the pandemic.  Meanwhile, 26% of advisers said they had seen no change in the number of equity release cases they have advised on since the pandemic began.

What are clients using equity release for

Another interesting trend is that 53% of advisers had witnessed more clients using equity release to help family members onto the property ladder over the past year, most likely due to the recent Stamp Duty holiday, while 34% had seen an increase in the proportion of clients using equity release to help relatives who were struggling financially.

The study also reports 16% of advisers said that clients were looking to support their children or grandchildren more generally when asked by more2life in 2020.

Additionally, 31% of advisers said they have supported a larger number of clients wanting to take out equity release to repay their residential mortgage, while  27% said more of their customers using equity release were doing so to refinance debt since the onset of Covid-19.

Dave Harris, chief executive officer at more2life, comments: “The later life lending market is facing an interesting conundrum – we’ve worked hard to educate people on the role that housing equity can play in retirement, but we are also aware that, now more than ever, we need to encourage people to avoid knee-jerk reactions and make smart sustainable choices for both the long and short term.”

“That almost 80% of advisers expect to see more customers looking to equity release to support basic needs in retirement during the next year is not surprising.   We have told them that later life borrowing is a safe viable option and people have listened.  What we need to do now as an industry is to ensure over-55s get high quality advice that helps them find the best solution for their specific needs – whether this involves an equity release mortgage or an alternative option.”

Harris adds: “With a growing number of people turning to advisers for guidance on funding needs in retirement, the later life market must ensure that it continues to support advisers with the very best range of products and tools, so they are well-placed to support as many borrowers as possible throughout this turbulent time.”