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90% of them have or would recommend it to family and friends and more than two out of three equity release customers say it has made a substantial difference to their quality of life, the first comprehensive study into the experience of customers over the past 20 years from the UK’s leading equity release adviser Key shows.
Data from the study shows more than £32.6 billion of property wealth has been released with 557,000 customers and their families benefiting from the money which has also helped boost the wider UK economy and housing market.
The report Equity Release Revolution found 67% of customers over the past 20 years say equity release had made a major contribution to their quality of life. Key launched the study to find out what customers thought about the modern equity release market and to address historic myths and misconceptions around the market. It questioned customers who had taken out products in the past 20 years.
Equity release in action
A major focus of the study was perceptions around how well customers felt they had been advised with 92% of customers saying their adviser had explained the product and process well or very well. Around 60% involved family who were supportive of their choice.
The study found the money released has helped to improve the standard of living in retirement supplementing existing pension income while also enabling clients to support family and boost their own finances. More than a third of customers (35%) over the past 20 years say equity release has improved their general standard of living while 30% say it has helped to maintain the standard of living they want and 23% say it has enabled them to support family. Just one in ten (10%) said it had not improved their standard of living.
However, it’s not just about money – equity release has had an impact on wellbeing and mental health. Half (50%) said it had eased day-to-day financial worries while 33% say it has helped them to keep doing the things they enjoy and 22% say it has helped to adapt their home so they can continue living there.
Over this period average interest rates have declined from a peak of 6.8% to 3.3% in Q1 2021, 49% of products offer ad hoc penalty free repayments, 44% permit customer to make interest repayments on their borrowing and 46% offer downsizing protection. The level of flexibility is due to there being 769 products available on the market. This is three times the number of products available in Q1 2019. In just two years this sector has significantly evolved and innovated with the customer in mind.
Since 2008 there has been a gradual increase in the average age of an equity release customer from 68 (2008) to 70 in Q1 2021. Typically married couples make up the largest cohort of customers releasing equity (59% in Q1 2021) however this has been decreasing gradually year on year from 63% in Q1 2011, before peaking at 68% in 2017. In balance to this, around double the amount of single women use equity release compared to single men, with this being the case for the last ten years (27% single women v 14% single men in Q1 2021 and 25% single women v 13% single men in Q1 2011). There are multiple societal factors driving this including comparatively lower pension pots for women.
More than half (56%) have no regrets about taking out equity release. Interestingly, those who did have some regrets were often more concerned about the financial situation they found themselves in, rather than concerns relating to equity release as a product. Of those surveyed 12% said their only regret is not borrowing more, 12% regret having to borrow in later life, and just 15% were concerned about the reduced inheritance for family. One in five (21%) said that they regretted that when they took out equity release there were no other alternatives and 4% wished that products were more flexible – both issues that are far less likely to be of concern for those who took products more recently.
Will Hale, CEO at Key, said: “Equity release has made a significant difference to the lives of many people and has evolved into an industry that with a clear focus on customer needs. Very few industries can say that 90% of customers would or have recommended their products to others and only 10% say that taking out a plan has not improved their standard of living. Given the scrutiny on the sector we felt an extensive survey going back many years would answer questions around whether customers had any regrets, which the majority do not. Although there is always room to adapt the market further to continue to provide positive customer outcomes.
“There is still more that needs to be done on developing products that provide the increased flexibility that today’s customers demand and considering how we as an industry tailor advice to ensure that it keeps pace with how the later life lending market is evolving. We must continue to stay close to the customers we serve and strive to exceed the expectations of our regulator.”
Around the country:
The South East has seen the most property wealth released at more than £9 billion followed by London where £5.479 billion has been released and the South West with just over £4 billion.
The highest number of equity release customers are based in the South East at 129,085 - nearly double the next highest in the South West at 65,663. However the number of equity release customers in the North West at 64,600 is higher than the number in London at 51,838 despite Londoners releasing nearly double the amount of property wealth over the period.
|Region||Amount released||Number of customers|
|South East||£9.055 billion||129,085|
|South West||£4.006 billion||65,663|
|North West||£2.758 billion||64,600|
|West Midlands||£2.162 billion||44,872|
|East Midlands||£2.096 billion||44,683|
|West Midlands||£2.162 billion||44,872|
|East Anglia||£1.853 billion||34,189|
|Yorkshire & The Humber||£1.769 billion||43,282|
|North East||£804.853 million||19,613|
|Northern Ireland||£226.698 million||4,886|