Equity release market predicted to double 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.

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.

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."