This can be particularly advantageous for those who are retired or have limited income, as it offers financial flexibility and stability without the burden of servicing higher mortgage repayments.
By unlocking this capital, equity release not only gives retirees the means to enhance their own lives, but also direct the flow of capital towards activities that will ultimately fuel economic growth, unlocking the capital built up in the British economy to be diverted to more productive avenues.
With both demand and supply set to increase, the importance of creating a mechanism to match supply and demand, and therefore an efficient clearing price for the product, is vital to the health of the wider UK economy.
By taking the underlying loans and creating a liquid, listed and standardised product for pension and insurance managers, equity release can both meet the precise needs of customers, as well as deepen the supply of capital for those borrowers looking to utilise equity release to navigate their retirement.
Over time this will encourage better pricing, more competition and more innovation, all of which will benefit the UK economy.
Implementing this innovation is crucial to keep up with the market’s growth. There is a lack of available products across Europe, primarily due to the lack of funding structures that are able to support long-dated fixed-rate products such as the UK’s annuity liabilities.
The UK is well positioned to be at the vanguard of this industry, driving the export of financial services to the European market, another benefit to the UK.
British companies should take advantage of the European equity release market, which is expected to take off in the coming years due to the critical need for financial solutions that cater to a similarly ageing demographic on the continent.
John Jeffrey is managing partner of Senior Capital
