Lord Lipsey: equity release will play a major role in meeting care costs

Lord Lipsey has praised the ‘tremendous flexibility’ of equity release in providing extra income for over-55s and said it will play a major role in the ‘new world’ of care and retirement planning.

Speaking at a parliamentary reception hosted by Heather Wheeler MP on behalf of the Equity Release Council earlier this week, Lord Lipsey told an audience of industry representatives, parliamentarians, think tanks, charities and business associations that equity release can help many older homeowners to avoid a need to downsize or sell by allowing them to pay for care in the comfort of their homes.

As well as highlighting the benefits of growing competition and increasing funding supplies within the equity release industry, the Labour peer – who is also a member of The Council’s Advisory board – called for a renewed focus on information and guidance on the issue of long term care, so people can prepare in advance and make the best use of their financial assets to ease their quality of life.

Speaking at the reception, Lord David Lipsey* commented:

“There is a general consensus on the Care Bill that the costs of long term care have to be met in partnership with both the state and individuals contributing. In this age of austerity, free care for all is simply unaffordable. But many people have a substantial investment they can draw on in later life through the property they own – far greater than the value of their savings.

“Equity release has a major role to play for the many people in need of care who would dearly love to continue living in their own homes. It offers tremendous flexibility in the form of readily available cash to spend as you want, for example, on visiting support or home improvements to give an extra degree of comfort.

“In this new world of care and retirement planning, equity release can provide extra income in the comfort of your own home while also allowing people to preserve an inheritance for their families. Increasing the supply of funding and range of available products is helping to improve rates and move towards a position where older people can pay for the care they need without having to worry about the associated costs.

“At the same time, we must focus on providing the right information to the public about the cost of care and where they can look to for support. Many still expect that the state will pay for them in full, and it is vital we educate people on this issue and encourage them to seek proper advice to find the best solution to their needs.”

Nigel Waterson, Chairman of the Equity Release Council, continued:

“2013 has been a milestone year for the equity release sector: as well as welcoming the first new provider since June 2010 we have seen a surge of interest in secure borrowing through equity release products that leaves us on the point of reaching and exceeding the levels of 2008.

“With the next election less than 18 months away, a growing, innovative and competitive equity release market offers a solution to the most intractable challenges for policymakers – care in older age and disappointing incomes in retirement to name just two. Higher taxation or increased government borrowing are not the only solutions, when many over-55s already have the means to improve their financial position and quality of life through the value of the property they own.”

Lord Lipsey: equity release will play a major role in meeting care costs

Lord Lipsey has praised the ‘tremendous flexibility’ of equity release in providing extra income for over-55s and said it will play a major role in the ‘new world’ of care and retirement planning.

Speaking at a parliamentary reception hosted by Heather Wheeler MP on behalf of the Equity Release Council earlier this week, Lord Lipsey told an audience of industry representatives, parliamentarians, think tanks, charities and business associations that equity release can help many older homeowners to avoid a need to downsize or sell by allowing them to pay for care in the comfort of their homes.

As well as highlighting the benefits of growing competition and increasing funding supplies within the equity release industry, the Labour peer – who is also a member of The Council’s Advisory board – called for a renewed focus on information and guidance on the issue of long term care, so people can prepare in advance and make the best use of their financial assets to ease their quality of life.

Speaking at the reception, Lord David Lipsey* commented:

“There is a general consensus on the Care Bill that the costs of long term care have to be met in partnership with both the state and individuals contributing. In this age of austerity, free care for all is simply unaffordable. But many people have a substantial investment they can draw on in later life through the property they own – far greater than the value of their savings.

“Equity release has a major role to play for the many people in need of care who would dearly love to continue living in their own homes. It offers tremendous flexibility in the form of readily available cash to spend as you want, for example, on visiting support or home improvements to give an extra degree of comfort.

“In this new world of care and retirement planning, equity release can provide extra income in the comfort of your own home while also allowing people to preserve an inheritance for their families. Increasing the supply of funding and range of available products is helping to improve rates and move towards a position where older people can pay for the care they need without having to worry about the associated costs.

“At the same time, we must focus on providing the right information to the public about the cost of care and where they can look to for support. Many still expect that the state will pay for them in full, and it is vital we educate people on this issue and encourage them to seek proper advice to find the best solution to their needs.”

Nigel Waterson, Chairman of the Equity Release Council, continued:

“2013 has been a milestone year for the equity release sector: as well as welcoming the first new provider since June 2010 we have seen a surge of interest in secure borrowing through equity release products that leaves us on the point of reaching and exceeding the levels of 2008.

“With the next election less than 18 months away, a growing, innovative and competitive equity release market offers a solution to the most intractable challenges for policymakers – care in older age and disappointing incomes in retirement to name just two. Higher taxation or increased government borrowing are not the only solutions, when many over-55s already have the means to improve their financial position and quality of life through the value of the property they own.”

Pure Retirement is first new equity release provider since 2010

New mortgage lender Pure Retirement is set to launch in January 2014. Pure Retirement is a sister company to Age Partnership, the retirement specialists, and is the first new equity release provider to enter the market since June 2010*. Pure Retirement will offer advisers innovative equity release products to meet the changing needs of today’s consumers.

Following continued growth of the industry, which in Q3 2013 saw the single largest amount of equity released in a single quarter since Q3 2008**, the company will use the combined knowledge and expertise of its management team to provide a fresh offering to the market.

Strong management team

Pure Retirement is being spearheaded by Managing Director Paul Carter. Paul has worked within financial services for more than 30 years, with the last 16 focused within the equity release industry, covering distribution, advice and lending. His comprehensive experience is drawn from working for some of the largest  players in the industry, including being Managing Director at Cavendish Equity Release until April 2013, Sales Director – Prudential Lifetime Mortgages from 2010-2013, and previously working in Equity Release at Millfield Partnership (2003-2007)and Norwich Union (now Aviva) (1998-2003).

His leadership is complemented by the highly qualified members of the board, including: Andrew Thirkill (Chairman), Jonathan Simpson (Financial Director), and Tim Loy (Non-executive Director). Pure Retirement will be making further appointments in 2014.

Intentions and goals

Pure Retirement has already confirmed its membership of the Equity Release Council and will therefore follow its Code of Conduct. The company aims to become one of the top three providers in the equity release industry – and believes this can be achieved through its ability to bring new products to market quickly.

Paul Carter, Managing Director of Pure Retirement, commented:

“The equity release market is in good shape, but we believe our launch will provide it with renewed vigour.

“Equity release products are becoming increasingly relevant to today’s retiring population, as traditional forms of retirement finance continue to come up short. But in order to adjust to a changing landscape we too must adapt our approach, and this is precisely why we have decided to launch Pure Retirement. We believe our fresh approach to the products will make them better suited to meet the needs of consumers.

“We are proud to be the first new provider in the market for more than three years.  Although the process of launching a new company such as Pure Retirement is lengthy and complex, we expect to see more providers follow our lead as the equity release market continues to grow.”

Stuart Wilson, Managing Director, Equity Release Club, commented:

“From a stable of great pedigree and a management team with experience and a successful track record, they will bring an injection of innovation to the sector.”

 

Equity Release Council meets with MPs and peers to discuss attitudes towards retirement saving

The Equity Release Council (The Council) will meet with MPs and peers today at the House of Commons to examine the current attitudes of older people towards saving for retirement. 

Confirmed speakers include: Steve Webb MP, Minister of State for Pensions at the Department of Work and Pensions; Mel Duffield, the Deputy Director of the Pensions Policy Institute; Dean Mirfin, Group Director of Key Retirement Solutions; and Nigel Waterson, Chairman of the Equity Release Council.

The discussion will be chaired by Heather Wheeler MP, a member of the Insurance and Financial Services All Party Parliamentary Group (APPG). Members of government, opposition parties, and representatives from across the equity release industry will also be in attendance.

The event has been inspired by research conducted by The Council earlier in the year which revealed that nearly two-thirds of adults in the UK were unaware, unwilling or unable to address the financial challenges facing them in retirement. These findings are of particular relevance in light of recent concerns regarding our ageing population, the continued rising cost of living and the increasing number of people finding themselves approaching retirement with insufficient savings.

Before taking questions from the floor, the speakers will discuss the different attitudes that those approaching retirement can take and subsequently present the various options for later life funding that are currently available.

Nigel Waterson, Chairman of the Equity Release Council, said:

“With budgets already under considerable pressure, it is understandable that many are choosing to push retirement planning further down their to-do-list in favour of more pressing matters.

“But unfortunately, this delay tactic could simply cause you more worries later down the line. Retirement planning can be a daunting topic, but the best way to find your way through the maze of options that are available is to seek professional advice from an independent adviser.

“Accessing housing wealth can often be a logical option for those who find themselves reaching retirement asset rich but cash poor, and thanks to the recent house prices increases this potential pool of wealth is swelling.  Equity release can allow you to release money from the value of your home without the stress of having to move, and you can even set aside a portion of your estate in case you want to leave this as an inheritance for your children.”

 

Dean Mirfin, Group Director at Key Retirement Solutions, said:

“Lifestyle priorities clearly dictate for many their motivations through life. Sadly saving for retirement is the one area of neglect at the expense of the lifestyle choices that we have to make. A roof over our heads and ensuring that our children are best looked after may be the core if what many if our finances allow.

 

The outlook, no matter what we do to encourage saving for retirement, is that this trend is not set to change. For this reason property assets will remain for many a vital part of unintended retirement planning strategies later in life.”

Equity Release Council: Total equity released in third quarter hits five-year high of £284.1m

Equity release plans see highest quarterly jump since 2004

Almost 14,000 release equity from their home in 2013 to date

Drawdown mortgages reach 2008 levels

16 October 2013:  The total value of equity release plans agreed in the third quarter of 2013 reached £284.1m. Up 14% year-on-year and up 15% on the previous quarter, this represents the greatest quarterly jump seen since 2004 (Q2-Q3 – 30.15% increase) and the biggest single quarter since Q3 2008, according to the latest figures from The Equity Release Council.

The average amount released has also broken records, with each customer now releasing £57,107. This amount is the largest since quarterly records began in 2002, potentially sparked by the ever increasing cost of living, coupled with the dwindling saving pots of the over-55s.

Equity release customers flood to market

The number of equity release customers has increased, as almost 14,000 over-55s have released equity from their homes in 2013 to date, and nearly 5,000 new customers have come to the market in the last three months alone.

The 4,975 new customers in the third quarter of 2013 is the most seen in a single quarter in four years (Q2 2009 – 5,198). This is up 7% on the second quarter and represents a 4% year-on-year change.

Lump sum versus drawdown

The total value of both lump sum and drawdown mortgages has also increased in the last quarter and year, with drawdown mortgage values reaching £187.9m – the highest since 2008 (Q3 – £218.8m) – and lump sum mortgage reaching £95.7m  – the highest since 2009 (Q4 – 101.9m).

Drawdown mortgages remain the more popular choice with consumers, representing 66% of the market value – a slight increase on the last quarter (64%). The percentage of market share for lump sum mortgages has slightly decreased by one percentage point from Q2 to 34%.

IFA advice still tops charts

The latest figures also reveal that 97% of equity release plans are sold through independent financial advisers. Creeping up every quarter since records began (as low as 64% in Q3 2003) it is clear that equity release customers are increasingly looking to independent advisers to get the best and most suitable plan for their individual needs.

Nigel Waterson, Chairman of the Equity Release Council said:

“As our figures continue to leap up quarter-on-quarter, year-on-year – the equity release market is very much alive. It is encouraging to see significant increases in not only the number of over-55s making the most of their property wealth, but also the amount that each individual is able to release. The growing interest in the market is a sign that equity release has an increasingly important place to play in financial planning for later life, giving advisers a key option to assist their clients among the range of retirement products.

“With house prices rising month-on-month, but saving pots dwindling and the cost of living soaring, equity release can offer homeowners a way to take the stress out of retirement, whether it be to help with those outstanding debts or to just ensure you can enjoy your later years.”

Equity Release Council moves to reinforce consumer protections

The Equity Release Council has introduced an additional set of safeguards to ensure consumers get the best possible advice and service as the industry continues to grow. 

Adviser members will now present every customer with a suitability report to clearly show the reasons why a particular product has been recommended for their personal needs.

Provider members must also make a copy of The Council’s Code of Conduct available – either directly or via The Council website – to anyone looking to agree an equity release loan. This new measure will ensure every customer understands the level of service and support they are entitled to receive.

The Code itself was founded in 1991 and ensures members act in the best interests of consumers. It gives them the right to use their property as their main residence for life; ensures they receive a fair, simple and complete presentation of their equity release plan and the costs involved; confirms their right to independent legal advice; and guarantees they will never owe more than the value of their home.

The Council now specifies that independent legal advice must be given face-to-face by a qualified professional as an added safeguard so that consumers fully understand any loan they take out.

These changes form part of The Council’s updated Rules and Guidance which apply to its wider membership of providers, advisers, intermediaries, lawyers and related equity release professionals.  Membership has flourished to almost 300 since The Council’s relaunch in May 2012, while the wider industry has leapt in value by 13% year-on-year*.

With members continuing to report increasing demand over the summer, this growth rate puts the industry on course to exceed an annual value of £1bn in 2013 for the first time in five years.

Nigel Waterson, Chairman of the Equity Release Council said:

“The modern Code of Conduct gives equity release customers unparalleled protection, and these latest additions to The Council’s rules and guidance will bring them even greater comfort as they explore their financial options in later life.

“A combination of outside regulation and self-governance helps to ensure customers are fully informed of their options and in the best possible position to judge how to make their finances work in retirement. With incomes squeezed and non-existent returns from many savings accounts, this often means bringing their property wealth into play – the largest asset which many over-55s have at their disposal.

“Equity release product rates have recently improved in line with market conditions, and while they remain differently priced than residential mortgages, this reflects the greater commitments from lenders to protect their borrowers against the threat of negative equity.”

Equity Release Council appoints Donna Bathgate as Chief Operating Officer

7 August 2013:  The Equity Release Council has appointed Donna Bathgate, formerly Head of Marketing Operations at the Chartered Insurance Institute (CII), as its new Chief Operating Officer.

Donna started her career in the finance services sector with equity release provider LV= where she was Regional Customer Service Manager for the South East.

She also spent time with the Society of Mortgage Professionals and was instrumental in the creation of the Personal Finance Society, overseeing the operational aspects of the merger between the Life Insurance Association (LIA) and the Society of Financial Advisers (SOFA).

Most recently Donna was Head of Marketing Operations and Projects at the CII, where she was responsible for a number of professional body’s major strategic projects.

Her appointment will strengthen The Council’s team at a time when the equity release market is experiencing considerable growth. Increasing activity in the first six months of 2013 makes the year to date the most successful since 2009 in terms of the total value of plans agreed: putting the industry on course to agree £1bn worth of equity release plans this year for the first time since 2008.

Nigel Waterson, Chairman of the Equity Release Council, said:

“I am delighted to welcome Donna to the Equity Release Council at a time when it is growing in both its influence and reach. She brings valuable expertise from her background in mortgages, property and financial services, and I am confident she will embrace the challenges that face us going forward.

“The Council has grown from a dozen members to approaching 300 in a short time, and we speak for 90% of the sector. Our ambition is to continue to improve how we operate to support the industry as it grows. Donna’s project management experience will help to coordinate a collective push that puts equity release at the forefront of people’s retirement planning agenda.”

Commenting on her new role which begins in October 2013, Donna Bathgate said:

“I am arriving at an exciting time for the Equity Release Council and am very much looking forward to the challenge of supporting the organisation and its members to best address people’s financial needs in later life.”