REVIEW
EQUITY RELEASE
Tough times will pass, but equity release is here to stay Andrea Rozario COO, Bower
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olitics certainly isn’t boring at the moment. These past couple of years feel like they have crammed in enough history to last a lifetime, and it shows no signs of slowing down. To be honest, I really don’t envy politics students of the future when they come to the 2020-onwards module – that’ll be a thick textbook! For the current government, it feels like the end may be in sight before they’ve even had a chance to settle in. Indeed, around Westminster there seems to be a real 1997 vibe and, if the opinion polls are to be believed, the Conservatives are heading to the end of their 12-year reign. However, we are still a few years out from a general election – unless the Tories pull another surprise on us and call one earlier, of course – so there is still time to turn the tide for Truss and co. But it will be tough. The ongoing cost-of-living crisis, Brexit headaches like the Northern Ireland protocol, and the tragic war in Ukraine show no sign of abating. Plus, sectors like the property market and mortgage trade, as well as the broader economy in general, feel particularly twitchy in response to the new, rather audacious approach Truss’s Tories are pursuing. For equity release, my corner of the wider mortgage industry, many will be worried this economic instability and resultant rate rise will knock us back from the solid progress we have been making post-COVID. So I am here to make the case for why the lifetime
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mortgage is in it for the long haul. First off, the retirement finance landscape has changed enormously. Why? Well, for one, people are living far longer than they used to. Today, the average person can expect to live into their eighties, whereas just a few decades ago this was much rarer. This has had a huge impact on how people live their lives after their careers – mostly down to the simple fact that they have much more time to budget for. However, there is another reason things are different for retirees today, and it comes down to something a little less tangible: attitude. Today’s retirees aren’t like their parents and grandparents. They have different outlooks, hopes, and goals for their retirement. After all, those retiring now grew up in the 1960s and lived through the Summer of Love, were young adults during punk, then hit maturity in the 1980s. Of course they will be different from their parents and grandparents, who lived through war and austerity. I often wonder how many of our clients once sported a Mohican or wore a power suit in the ‘80s. I think people sometimes expect older clients to forget their previous lives and fit into some sort of homogenous ‘old person’ box, but this is false. Beyond past fashion choices (or fashion crimes), you may argue, today’s retirees see their finance plans for later life through a totally different prism. In the past, the traditional pension would have reigned supreme as the primary retirement finance vehicle. Today, however, many retirees are well aware that it’s assets like their property that will also be something to consider. And whilst saving for retirement for the younger cohort is encouraged far more today, it’s those baby boomers who have to look at all options. According to a recent report pub-
MORTGAGE INTRODUCER NOVEMBER 2022
lished by the Equity Release Council celebrating their 30-year anniversary, 57 per cent of homeowners surveyed were interested in accessing money from their property as they get older.1 And I will bet this percentage will only rise. Why? Well, another stat from the report reveals that over a third (34 per cent) of homeowners are worried about running out of money in retirement.2 So tapping into property wealth – the asset that most homeowners will say has been their biggest success – will increasingly become something to consider. Regardless of current instability and upheaval, millions of people across the country will be entering retirement needing financial help and choices. Property wealth is the choice many may need to secure the retirement they want. So how do they make this a reality? Downsizing is one option, for sure, but this in turn needs careful consideration. Ultimately, options like remortgaging and accessing products within the equity release suite, along with more products that develop alongside the increasing need, will come to the forefront for many homeowners. Property wealth is becoming an integral part of modern retirement planning, and products like the lifetime mortgage will have a much bigger role to play as the retirement landscape continues along this trajectory. With the country, and indeed the globe, going through tough times, we need safety nets we can rely on, along with safeguards and choices that will support future generations of retirees who wish to have a comfortable and fulfilling retirement. M I 1 https://secure.webpublication. co.uk/18541/.Equity-Release-Council-anniversary-report-2022/#page=11 2 Ibid. www.mortgageintroducer.com
