The number of equity release product options has doubled in a year to almost 300, according to the Equity Release Council’s autumn 2019 market report.
A total of £1.85bn in housing wealth was unlocked in the first half by homeowners aged 55+ to support their later life financial planning.
The top growth areas over the last year include options for sheltered or age-restricted accommodation, interest-serviced (regular interest payments) options, downsizing protection, inheritance guarantees and drawdown facilities.
Product options offering the ability to make regular interest payments increased to 81 in August 2019, up 80% since the start of the year and almost quadrupling year-on-year. This feature lets customers pay interest in part or in full without the risk of repossession if payments are no longer affordable, with the option of switching to roll-up at any point.
There was a 269% annual rise in product options available on sheltered and/or age restricted accommodation, while the range of options offering downsizing protection doubled. This feature allows customers to downsize and repay their loan without incurring an early repayment charge.
Products offering inheritance guarantees have seen an 88% year-on-year increase, giving customers the option to ring-fence part of their property’s value to leave behind as a guaranteed minimum inheritance.
The report also shows the average equity release rate is at a record low of 4.91%. Over half (58%) of products offer a rate of 5% or less, while a fifth (21%) of products are priced at 4% or below, with these rates being fixed or capped at a maximum limit for the entire life of the loan.
David Burrowes, chairman of the Equity Release Council, said increased product innovation and flexibilities are helping to meet a wide range of financial and social needs, from providing extra retirement income to passing on wealth to younger generations.
“A broader range of products means equity release can play an important part of advisers’ toolkit when considering clients’ requirements in later life. It’s vital that advisers across a host of areas – including pensions and wealth management – can identify when equity release may or may not be suitable based on today’s product range and can refer a client for specialist advice where appropriate,” he stated.