For a number of years the lifetime mortgage and home reversion markets have been predicted to soar but, while there has been limited year-on-year growth, it still retains the appearance of being slowly awakening. However it is a potential giant.

The potential demand is obvious yet largely untapped: inadequate pension provision, low annuity rates, increasing life expectancy together with high levels of equity built up in property over many years.

At first glance you would assume that the main demand would be to supplement income but the majority of analysis has pinpointed that equity release is mainly used to fund lifestyle aspirations - things like a new car, exotic holiday or home improvements. Other demands encompass things like inheritance tax planning, nursing care, gifting to children/grandchildren and debt consolidation. I’m convinced that the latter is going to become a growing motive particularly with the increasing trend to take out interest-only mortgages without arranging any appreciable repayment strategy. (more…)