Following our event in June ‘Understanding Equity Release and How it Can Help You to Educate Your Clients’ we caught up with Jane Forshaw, Business Development Manager at Pure Retirement, who was a speaker at the event.
The equity release market has grown rapidly over the past couple of years and continues to achieve record-breaking borrower volumes. We caught up to talk about the growth of the industry, product innovation and meeting consumer needs.
Tell us a little bit about Pure Retirement and your role
Pure Retirement is a specialist mortgage lender in the equity release industry and prides itself on remaining at the forefront of the equity release market.
We bring a focus and accessibility to all our customers. The decision to release equity from your home is such big decision that needs a great deal of thought and attention.
We have 3 Business Development Managers at Pure who have long recognised and understood the need for strong and effective relationship building. Our working philosophy focuses on providing a dedicated service that works with advisers to improve their awareness of product and services, not just at Pure but in the wider market space.
Furthermore, there is a passion to communicate the wider benefits of not just our own innovative solutions and market-leading service, but also the opportunities within the wider market.
Not only do we work closely with our existing advisers, but we host a variety of Roadshow events and attend external events where we can access those who are newly qualified or perhaps thinking about becoming qualified. It is about education and understanding the wider market, providing more of an understanding to equip individuals with all the essential tools they need when embarking on their equity release journey.
The equity release industry is growing at an unbelievable rate with more and more people taking equity our of their property.
From your experience, why is there an increasing number of people taking equity release?
Initially, equity release may have been something to consider out of necessity. This has changed in recent times with people considering releasing equity to fund their retirement and fulfil their aspirations in later life. There are a considerable number of people who are retiring on much less than what they had once perhaps predicted.
A large number of pensioners can be termed ‘asset rich, cash poor’. People spend years paying off their mortgage with very little savings. Equity release is a great way to bridge the gap in later years and to provide retirees with the lifestyle they had hoped for.
Equity release is still being used to clear existing debt or perhaps gift to children and grandchildren. However, nowadays aspirational needs are also being met by going on holiday, making home improvements and even buying a sports car that has always been on the bucket list!
How well do you think the industry is coping with the increased demand?
The equity release industry has seen high levels of product innovation and development over the last few years. The number of plans available has increased and there are so many options available on the market now for customers to consider.
The industry is thriving with the increased demand and we have certainly seen some record breaking figures that keep increasing. The equity release industry had a turnover of £3.94 billion in 2018 and the industry is set to beat that in 2019.
Whilst the industry is booming, it can’t be taken for granted that education is paramount for advisers so that they are well equipped to advise clients on releasing equity. The wider picture needs to be taken into consideration and we need knowledgeable advisers who can work with their clients and lenders within the marketplace.
We are also seeing an increased number of advisers looking to be a part of the equity release market. More and more IFAs in particular are excited to be a part of this growing industry. Importantly, expert advice from a qualified equity release adviser is paramount.
The number of products available has more than doubled in recent years with rates now as low as 2.99%, what are your thoughts on product innovation and the sustainability of these new products?
The products have changed dramatically and 2019 saw rates as low as 2.99%. The amount of flexibility with products now makes them increasingly attractive to those considering later life lending.
There were 233 plans available to clients that were considering equity release in Q1 of 2019. In addition, there is choice available to prospective clients now and that is definitely something that we have succeeded at when it comes to product innovation. An increasing number of plans now include inheritance and downsizing protection, 3 year exemption on long term care/death and the choice to make partial repayment to name a few features – it’s totally down to the client to decide what they want.
What are some of the biggest challenges that advisers face when working with clients?
As we know, equity release has not always been seen in the most favourable of terms. In the past, it has been seen as more of a ‘taboo’ subject and one that was seen in more of a negative light.
This train of thought is increasingly becoming a thing of the past.
There are often misconceptions. For example, it may be thought that children will be left with debt and the debt will become more than the house is worth. None of these are the case. It is about education and people understanding how beneficial and life changing equity release can really be.
How do you see the equity release market changing in the next few years?
There is huge growth potential within the equity release market. There are currently 12 million people aged 65 and over in the UK, so there is great opportunity for lenders and borrowers alike.
The market share is beginning to equalise which demonstrates the desire for equity release products beyond doubt. The growth in equity release has been driven by innovation across the later life lending market; the number of product options available has more than doubled in two years.
Innovation in recent years has certainly brought more competition to later life lending, helping customers achieve their necessary and/or aspirational needs.
As a result, I can only imagine that things will continue to grow and prosper within this exciting industry.