Growth Expected In Equity Release Loans April 10th, 2012
Equity release loans have seen a significant level of growth in recent years, as people use them to help provide funds for their retirement planning, as well as many other uses. But a new survey suggests that there is still a significant level of growth to be expected within the equity release loans market in coming years.
The survey amongst Independent Financial Advisers and loan brokers was conducted by LV= and found that around 98 per cent of those interviewed thought that the equity release loan market would grow substantially, with around half of all loans being used to help make up the shortfall faced by many in their pensions.
Around 30 per cent of advisers said that they expected a large proportion of new equity release loans to be used for paying off existing home owner loans and other debt, such as personal loans and credit cards. 9 per cent of advisers said that equity release could also be used as a home improvement loan for many retirees.
At the moment, the majority of equity release loans are used for luxuries, such as holidays or home improvement loans, but this is expected to change in the future as more people start to depend on the equity in their home just to cover their day to day living expenses.
Andrea Rozario of the trade body SHIP (Safe Home Income Plans) said that a combination of short funded pension pots, poor annuity rates and outstanding debts on existing home owner loans and mortgages, will drive many people to use the equity in their home, as this is often their largest asset.
She said “What we will see is all of these factors coming together more as time goes on and people will realise they must use their housing wealth. Equity release loans are beginning to gather momentum and are climbing up the political agenda.”