Despite record breaking numbers of homeowners releasing tax-free cash from the equity in their home, there remains an unfortunate stigma attached to Equity Release industry.
This often manifests itself in a form of shame among our customers who feel that they have somehow failed by taking out another mortgage.
A recent report, The Future of the UK Equity Release Market by Louise Overton and Lorna Fox O’Mahoney, covers a number of areas that advisers and providers alike should digest and act upon.
One such area being the need for the equity release industry to help customers ‘break the silence’ and discuss lending in retirement more freely.
The report catalogues and analyses the opinions and experiences of 70 equity release customers who took out a plan at least five years previous. When asked if they knew anyone other than themselves who had an equity release plan, ‘the overwhelming majority reported that they did not’.
The respondents claimed that many of them felt that their generation never openly discussed money matters while some felt that ‘admitting’ to an equity release plan would signify some level of ‘failure’, or something to be ‘ashamed’ of.
Tackling these ingrained feelings of shame may be a difficult task, but there are things we can do to start chipping away at these sentiments.
Towards the mainstream
As an industry we must continue to help push equity release towards the mainstream mortgage market and eventual widespread acceptance. We are on the path towards the mainstream but there is a distance yet to travel.
Once we are there, however, the lifetime mortgage will have reached a level of normalisation that should, one hopes, aid in the erosion of this sentiment of shame and failure.
No one, for example, feels any sense of shame at taking out a mortgage during their working life, so widespread normalisation of lending in retirement must occur, especially with a population growing older, who will need increasingly more options to finance an ever-lengthening retirement.
To achieve normalisation we must help tackle the poorly researched, often erroneous ‘stories’ that run in the national media regarding equity release.
Boosting the reputation of the equity release industry as a whole will begin to change the opinion of the older generation and set off a positive domino effect facilitated by word of mouth.
The process is a slow one and the next generation of equity release customers will have a different attitude to taking out further lending in retirement, but educating the public to help them understand the option of equity release and tackling unbalanced media reporting can help the current generation, too.
A nation of homeowners
As we attempt to push the lifetime mortgage to the mainstream we can also attempt to erode the ingrained feelings that outright home ownership is inextricably linked to success.
The older generation have internalised this sense that owning one’s home outright, with no mortgage, is a sign of success; however, we can help by showing that the money released via equity release can vastly improve the lives of customers.
What’s more, if we can spread the understanding that the lifetime mortgage does not affect ownership, then older homeowners will begin to see equity release as simply another way of converting their housing wealth into something real, something tangible.
Once equity release reaches the mainstream and potential customers see that the property wealth that they have amassed over the years can be used to fund an array of things from often much-needed house repairs to life enhancing experiences, the belief that using property wealth is somehow bad will soon vanish.
Equity release is available to homeowners aged 55 and over, but the average customer is currently over 70-years-old.
It is this 70 and over generation who have the ingrained attitudes that money matters should remain undiscussed, more than private even.
They are a generation who see lending in retirement as something that should be avoided, but this is slowly changing and we must help erode these attitudes so the possibilities and advantages of equity release, along with the impact and variety of options open to them, enable them to make informed decisions.