Equity release specialists have reported a 30 per cent increase in equity release referrals year-on-year.
Why is equity release gaining in popularity? Here is a look at the reasons that equity release referrals have risen by 30 per cent.
The numbers behind the growth
30% Growth in Equity Release Referrals
As pension values fall, equity release has grown in popularity as millions look to avoid reductions in their income when they retire.
Research has shown that customers currently being dealt with through referral relationships release approximately £96,064 on average, which works out at 12 per cent higher than the average on the market of £85,373.
In addition to these statistics, the average home has a valuation estimate of £392,402, which is 76 per cent higher than the national average house price. This works out to be £332,500.
Why more people are using equity release
Manage Retirement Finances
Industry experts have claimed that this record growth in the market for equity release has allowed a wide range of providers to realise that specialist advice would enable their clients to benefit from utilising their property’s wealth.
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Utilising your property’s wealth in retirement is no longer deemed to be a strategy for the less wealthy; many people are now using equity release to assist in managing their retirement finances, gift money to their grandchildren or children early, and possibly reduce their Inheritance tax costs.
The above-average property prices and case sizes for referral customers echo the growing demand from introducers including accountants, wealth managers, solicitors, networks and mortgage clubs.
Increasingly, as people are living longer, they are searching for a method to support themselves in later life with lending choices and are utilising the referral relationship with equity release providers to offer a more comprehensive solution.
While equity release providers accept referrals from a wide range of different sources, such as estate agents and mortgage brokers, they are seeing increasing interest from wealth managers, accountants and solicitors.
How released amounts have changed over time
Although the amount of money released by referral clients has remained higher than the average market price, the amount released on average has dropped during the past two years. There has been a drop to £96,064 in 2018 from £103,395 in 2017.
Industry experts believe that this adjustment has been driven by the wider range of people now approaching introducers for help with planning for later life.
Summary
This article reports equity release referrals rose 30% year-on-year, driven partly by falling pension values pushing more people to release money from their homes in retirement. Referral customers release an average of £96,064, above the market rate, often to manage retirement finances, gift money to family or cut inheritance tax. The average amount released has fallen slightly since 2017 as more people seek this advice.
Questions this article raises
- Why has the average amount released per referral fallen since 2017 even as referrals rise?
- How do inheritance tax savings from equity release compare with other estate planning options?
- Which professional group is driving the fastest growth in equity release referrals?
