An update on the Equity Release market.
Held on Tuesday, June 20, 2017
Nigel Waterson (Equity Release Council)
June Deasy (CML)
Steve Ellis (L&G)
Equity release is one of those ideas that is obvious, brilliant, and – in earlier incarnations at least – deeply flawed. It got a bad name in the 1990s through Shared Appreciation Schemes and Home Income Plans which, all too often, ended up fleecing the elderly.
But it is on its way back – not least thanks to the code of standards policed by the Equity Release Council. Today, the Home Reversion sector (in which the house is sold, leaving the resident in situ) has been pretty much swamped by so-called “Lifetime Mortgages” – in most cases, with interest rolling up. There are new wrinkles (in particular, provision to pay interest rather than letting it accumulate), but the key to both Home Reversion and Lifetime Mortgages is the “no negative equity clause” – which means the worst that can happen is that there is nothing left in the kitty when the beneficiary dies or goes into care.
There remain problems. The code, for instance, applies only to ERC members (albeit that's most of the industry) and the no negative equity clause means the products are expensive. There is also the possibility of an adverse impact on eligibility for state benefits. But, at a time when many older people are (relatively) asset-rich and cash-poor, the potential is obvious – and the need is great. No surprise, therefore, that total equity release lending was up 77% year-on-year in the first quarter, hitting £697m.
Hence this round-table. And, hence, we are delighted to welcome as our key speakers:
- Nigel Waterson, Chairman of the Equity Release Council (and of NOW Pensions);
- June Deasy, head of policy at the Council of Mortgage Lenders; and
- Steve Ellis, Managing Director of Legal & General Home Finance.
There is a lot going on in this area – and (at least to an outsider) it does look as though the products on offer are more competitive. But it has not been an easy ride, and there is always the threat of higher interest rates. Nonetheless, it should make for a lively discussion.
If you (or a colleague) would like to join the discussion, please call the office on 020 7621 1056 or email email@example.com. As usual, there will be wine and sandwiches for all.