Post-Brexit investment fears boost equity release enquiries
Mortgage broker, Responsible Equity Release has reported that there has been an increase in enquiries relating to equity release products following the referendum, witnessing a 44% rise.
Following uncertainty post-Brexit the impact has prompted a surge in the amount of enquiries received, with customers citing fear about future availability of this type of financial product.
Managing Director of Responsible Equity Release, Steve Wilkie said equity release is a product with a lengthy buying cycle and often consumers seek advice four to seven years in advance. He added that market uncertainty has now put such investment decisions in feared territory.
Wilkie predicts the recent interest rate reduction will affect retirees the most due to a reliance on the returns, meaning Brexit could have the biggest impact on a once financially stable generation. He assures that he truly believes equity release will continue to be available for the foreseeable.
In the wake of the UK’s decision to leave the EU, the aftermath could seemingly most greatly affect those age 55 and over in terms of financial implications.
So what does this mean for your clients who are considering equity release?
Equity release (or Later Life Advice) is offered in two different ways. Would-be customers can opt for the more common Lifetime Mortgage which means there are no repayments until the property is vacated or that person has died. Any interest accrued annually is built up over the duration and becomes part of a final sum repaid.
If a person opts for the Home Reversion scheme this means they effectively sell off all or part of the interest on the home which generates an income for them on a lease, enabling them to stay in the property rent free until death.
Figures show that since 2014 the market has risen by 24% to around £1.71 billion in the UK. Scottish figures reveal that the second half of 2015 saw the biggest increase in growth rates since 2008. The average amount being released was around £40,000.
What will happen in the coming months within the investments market is uncertain. However given the figures and boost in consumer interest, it is unlikely to take a downturn anytime soon.
Do you consider equity release to be a safe and viable option for your clients?
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