The equity release market is achieving “only a fraction of its potential”, despite strong growth, says later life lending platform Air.
Data from the Equity Release Council shows total lending grew by 11% last year to £2.57 billion, with 80% of advisers expecting total lending to continue to grow this year.
However, Air said that total lending through lifetime mortgages is just 8% of total later life lending at £25 billion, despite innovation in the products making them relevant to a substantial number of over-55s homeowners.
The firm said the number of new equity release customers rose by less than 1% last year, which it said demonstrated a lack of awareness among customers and advisers who are not later life lending specialists.
Will Hale, CEO of Key advice and Air, urged advisers to offer more holistic advice and make use of referral relationships.
He said: “The sector is still performing at a fraction of its potential despite the very welcome growth in total lending last year and the prospect of more to come.
“Innovation in lifetime mortgages means they are very much relevant to a growing number of over-55s homeowners and their needs. However, it is clear the lack of awareness among customers and advisers beyond later life lending specialists means they are not being offered lifetime mortgages.
“Given customer needs, the £25 billion value of the later life lending market should be higher and the share taken by lifetime mortgages should be higher too. The products are there but mortgage, pension and wealth advisers need to look beyond their silos and offer holistic advice – using referral relationships where appropriate to fill gaps in the scope of the advice and/or products that they offer.”
According to Air, potential growth areas include customers coming to the end of five-year fixed rate mortgage rate deals this year and facing significantly higher monthly repayments, those looking to gift to family – including helping younger generations onto the property ladder – and people needing to boost retirement income.
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