Norwich Union - a market leading equity release provider and part of Aviva - believes that the equity release sector may be one of the few to receive a boost due to the current economic turmoil and its effect on retirees' savings.
- UK equity release market predicted to double to £2.4 billion by 2013
Norwich Union - a market leading equity release provider and part of Aviva - believes that the equity release sector may be one of the few to receive a boost due to the current economic turmoil and its effect on retirees' savings.
Indeed, when this is combined with other main drivers such as the endemic lack of retirement funding, the potential entry into the market by high street banks and building societies and the Government emphasis on "self funding" for retirement, the market is predicted to grow to £2.4 billion by 2013.
This would be double the amount released in 2007 (£1.2 billion) and would see more than 1.5% of UK over-65 homeowners using these products annually to increase their income and enjoy a better standard of living in retirement.
With 115,617 consumers due to purchase 70,500 plans* in 2013, it is a clear indication that as the population ages and the retirement funding gap grows over the next five years, equity release will become increasingly important.
Key regional trends:
In 2013, the South East (25,516), South West (16,476) and East Midlands (16,765) are expected to have the most over 65s using equity release to improve their standard of living in retirement. In addition, despite the recent housing market downturn, retirees in the South East (£692 million pounds), are expected to release nearly three quarters of a billion pounds worth of equity in 2013. See table below for more details.
Pensioners Helped and Equity Released (2007 vs 2013)
| Region | Total equity released (2007) | Predicted total equity released (2013) | Total pensioners helped (2007) | Predicted total pensioners helped (2013) |
| United Kingdom | £1,200,000,000 | £2,420,664,431 | 54,090 | 115,617 |
| Wales | £38,440,536 | £77,543,032 | 2,130 | 4,554 |
| Scotland | £51,000,000 | £102,878,238 | 2,840 | 6,070 |
| Northern Ireland | £27,000,000 | £54,464,950 | 644 | 1,376 |
| England | £1,082,502,342 | £2,183,645,764 | 48,476 | 103,795 |
| East Anglia | £72,811,130 | £146,876,094 | 3,586 | 7,664 |
| East Midlands | £162,000,000 | £326,789,698 | 7,843 | 16,765 |
| London | £63,586,365 | £128,267,710 | 3,547 | 7,582 |
| North | £20,191,775 | £40,731,259 | 1,129 | 2,414 |
| North West | £74,627,113 | £150,539,331 | 3,990 | 8,529 |
| South East | £342,872,554 | £691,649,496 | 11,937 | 25,516 |
| South West | £183,000,000 | £369,151,326 | 7,708 | 16,476 |
| West Midlands | £99,827,041 | £201,373,140 | 5,188 | 11,089 |
| Yorkshire | £63,586,365 | £128,267,710 | 3,547 | 7,582 |
While equity release levels will grow at similar levels over the long term across the UK, we may see faster increases in Wales and Scotland as they have populations with higher average ages.
Anthony Rafferty, head of marketing, post retirement at Norwich Union, said: "We have been one of the leading providers in this market for ten years and have seen many developments and changes. While the economic turmoil has been hugely detrimental to many parts of the UK economy, it may actually stimulate growth in the equity release market. Going forward, we see the market doubling over the next five years and truly coming into its own as a mainstream retirement planning and funding tool.
"In 2013, we predict the equity release market will help more than 115,617 over 65s by injecting £2.4 billion pounds into their pre or post retirement income. This phenomenal growth will also be stimulated by high street banks and building societies entering into referral deals, the general lack of pension provision and the Government's push for self-funded retirements.
"Equity release is not right for everyone, for many it is the answer to their retirement income problem and we do see the market growing considerably over the next five with an increasing number of people benefiting from equity release."
-ends-
* This figure reflects the fact that equity release plans can be purchased on a joint (generally husband and wife) and individual basis. The ratios used to determine these figures were sourced from more than 80,000 Norwich Union customer records
Research Methodology:
- Predictions of the growth of the current equity release market over the next five years were created using data from SHIP (Safe Home Income Plans), information from more than 80,000 Norwich Union customer records and market size data from Mintel.
- The regional split was derived from Norwich Union's customer statistic ratios and adjusted for market forces and expected developments.
- The projection for the percentage of the over 65 population who will use equity release was derived from TNS research undertaken on over 2000 consumers by Norwich Union, Family Spending Report 2007 - ONS and Aging and mortality in the UK - Dec 2008 - ONS.
- The term number of customers helped refers to the number of single and joint policies taken out rather than simply the number of plans sold.
Press office contacts:
Norwich Union
Sarah Poulter - 01904 452828 or 07800 691569
David Gwyer - 0207 662 0550 or 07800 693187
The Wriglesworth Consultancy
Lee Blackwell / Karen Butcher/ Zara Hosford
Telephone: 020 7427 1400
E-mail: l.blackwell@wriglesworth.com
Notes to editors:
About Norwich Union
Norwich Union is the UK's largest insurer. It is a leading provider of life, pensions and investment products and one of the largest financial adviser (FA) providers. FAs provide over 70% of the company's long-term savings business in the UK.
Norwich Union is the UK's largest general insurer with a market share of around 14%, with a focus on insurance for individuals and small businesses.
Norwich Union's news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media
Equity release - Yesterday, today and tomorrow - A retrospective of the 10 year trends and forecast into future developments
This report was compiled using information from Norwich Unions over 80,000 customer records and all data contained therein is company specific unless otherwise indications. All predictions are those of Norwich Union only and are dependent on market factors as outlined in the report.
About equity release
Norwich Union is the leading provider of equity release plans in the UK. Source SHIP
Equity release is a way of unlocking some of the capital in your home and turning it into cash - without having to move. Norwich Union offers three types of equity release plan. These are known generically as:
- Lifetime mortgage: A loan secured against your home, with no regular repayments to make as the loan and interest are rolled up and usually repaid when you die or if you need to move into long-term care.
- Home reversion plan: Enables you to sell all or a percentage of your home in return for a cash lump sum.
- Lifetime mortgage including a drawdown option: A lifetime mortgage that enables customers to unlock some of the value in their home by releasing an initial amount of money and keeping a reserve fund available that can be released in future when required.
Taking a lump sum plus our costs will reduce the value you have in your home and therefore any inheritance you leave. You tax and welfare benefits may also be affected.
SHIP membership
Norwich Union is a found member of SHIP (Safe Home Income Plans), a group that was launched in 1991 and is dedicated entirely to the protection of planholders and promotion of safe home income and equity release plans. All participating companies are pledged to observe the SHIP Code of Practice.