Some would say it already has, but given the results of surveys and other research recently, it would appear everything is set up for 2015 to be a bumper year in the equity release market.
Demand has been growing significantly throughout the latter months of 2014. This, along with the expert opinions of many advisers in this part of the financial marketplace, has led to the promise of 2015 shaping up to be a healthy year.
Why is this financial product gaining such traction in the marketplace?
There are a number of reasons. Firstly statistics show the equity release sector achieved the £1 billion mark in lending during 2014. This was achieved by the third quarter. Secondly, the Equity Release Council has backed up this figure by confirming the third quarter in 2014 saw the highest level of lending over the space of three months. £375.5 million was recorded for the months between July and September this year.
Finally the pension changes that are due to come into force in April 2015 – just before the next General Election – will undoubtedly make a difference too. This will be the point when people entering retirement will no longer have to choose an annuity when their pension pot funds are released. Instead they will be able to use that pot however they wish.
It is strongly believed this will lead to a further surge in equity release as people realise they have to top up their available funds. Many homeowners will have paid off their mortgages by the time they retire, thus opening up the possibility of releasing some of the considerable equity built up in their homes.
What does 2015 hold in store?
Nearly two-thirds of financial advisers with experience in this sector believe equity release will be the next major financial product – one that will appeal to those on the verge of retiring (or those who just have retired). Furthermore, research by Stonehaven has shown that more than one third of advisers expect 2015 to be the year in which this sea-change occurs. Nearly half of all those questioned believe equity release will become a major product of interest within the next three-to-five years.
Only time will tell whether 2015 will be as successful for this product as many experts believe. However many people on the verge of retirement have ended up discovering they have too little cash to manage from day-to-day, let alone to afford anything above the basics. This has led to the realisation they are property-rich but cash-poor. Equity release provides a solution to this situation without the need to move out of the home people have lived in for years and brought a family up in as well.
All the indications are that 2015 will indeed be a strong year for equity release companies. It may well be the best one yet, but there is still plenty of room for it to develop further after that as well.