SHIP: Growth of equity release inevitable

The growth of equity release in the UK property market is 'only a matter of time', according to Safe Home Income Plans (SHIP).

The organisation, which champions high standards of delivery from UK equity release providers, was commenting following the release of research from the Council of Mortgage Lenders (CML).

According to the CML the sector has underperformed to date, with lenders concerned over entering the market given the potential damage to commercial reputations and a consequent failure to develop innovative products.

However, SHIP believes significant growth in the use of equity release is only a matter of time, given the extent to which consumers have opted for property over pensions in saving for retirement in the recent past.

The organisation also hopes the quality and standards of equity release schemes will improve over the coming years, attracting business to the sector.

"The reality is declining levels of private pension provision and meagre state pension benefits will drive more people in this country to explore alternative ways to top up their income in later life," said Andrea Rozario, director general of SHIP.

"Some will work longer, but a very large number are already planning to use the value in their property."

"All that is necessary for this sector to increase enormously in size is for consumers - and their opinion formers - to recognise the huge improvements that have been made to most equity release schemes."

SHIP argues that, if larger lenders can be encouraged into the market, the system could be revolutionised.

However, with the current uncertainties in the primary mortgage market, such moves may be delayed, but the organisation argues the likely reality of the housing market going forward may in fact encourage more mainstream lenders to diversify into equity release, recognising the extent to which demand is set to boom.

"It may well be the case that in the USA and Australia equity release is a more popular product than it is in the UK right now, but like flexible mortgages in the past, it does not mean we will not catch up in the future," concluded Ms Rozario.

The full CML into the status of the UK's equity release market can be seen here.