Transcript Slide 1
Market Stats &
Potential
So why do people release equity?
Reason for Loan 2009-2011
One-off purchase
Holidays
Home improvements
IHT Planning
Medical care
Mortgage/debt repayment/settle bills
Current std of living
Treat family
0.00
5.00
10.00
15.00
20.00
Percentage
Source: LV=
25.00
30.00
35.00
Current trends
Supporting family is a growing category:
School/university fees
House deposits
Weddings
Divorce settlements
Source: LV=
Current trends
The ‘luxury purchase’ is showing signs of recovery:
Purchase of holiday home/caravan/motorhome
Property development
Financing business ventures
Extended holidays
Source: LV=
Unusual cases
And some of our more unusual cases…
Face lift
Cosmetic dentistry
Solar panels
Charity rally driving trip
Source: LV=
Case study – property purchase
Pension not enough to cover
regular bills
Still working part-time
Had a fall – unable to maintain
property
Retirement development – great
location and support package
available
Needed cash to make up shortfall
in purchase price
Simultaneous purchase and
release of equity
Case study – delaying moving home
Properties in UK and Portugal
Income from overseas property
reduced
Cost of UK healthcare insurance
increased, value of shares
decreased
Unwilling to sell either property at
a loss
Cash released has paid
healthcare premiums and offset loss
of income from overseas property
Case study – helping grandchildren
Inherited property – needed
external and internal works
Wished to contribute towards
grandson’s school fees
Took a larger initial sum to pay
for work to property
Releases smaller tranches to pay
each term’s fees
How has this market performed?
Year
Volume of
plans sold
Value of
plans sold
(£m)*
2005
24,392
1,104
2006
27,772
1,154
2007
29,293
1,210
2008
28,224
1,096
2009
20,493
946
2010
17,574
804
2011
16,095
789
* Assumes house prices remains static
Figures from Mintel Equity Release Report, May 2011
and SHIP press release January 2012
Key points:
Peak in volume and value 2007
Followed by mortgage ‘crash’ of
2008
2009- introduction of drawdown
arrangements
2011 – total value of plans is down
slightly over 2010, but the final two
quarters showed a strong recovery.
In fact, the Q4 performance was the
strongest for two years
The green shoots of recovery?
And the future?
Year
Volume of
plans sold
Value of
plans sold
(£m) *
Percentage
change
(value of
plans)
2005
24,392
1,104
2006
27,772
1,154
2007
29,293
1,210
2008
28,224
1,096
2009
20,493
946
2010
17,574
804
2011
16,095
789
2012
23,748
986
+14%
2013
25,744
1,062
+8%
2014
27,701
1,131
+6%
2015
28,322
1,152
+2%
Key points
SHIP, lenders and advisers alike are
working very hard to raise profile of
equity release
Increasing recognition that ER
needs to be one of the cornerstones
of retirement planning
We believe the future is bright for
equity release
* Assumes house prices remains static
Figures from Mintel Equity Release Report, May 2011
Note that the 2011 figure used here was Mintel’s estimate only and they have used this to project forward to 2015.
2011 figures were lower than estimated
Future market potential
So, why do we think the future is bright?
UK population will continue to expand and age, putting further pressure
on public funds
Lower than expected investment returns
Low pension participation and falling annuity rates
Rising cost of care
Longer life expectancy
Property prices can generally be relied on to grow over the long term
The market has changed
There is no longer a single market for equity release ‘but rather
several markets, defined by different customer, product and
advice needs’
Six main customer types:
55+ with long term care needs (ineligible for state-funded care)
Vulnerable low-income older homeowners with debts (‘last resort’ cases)
Low-income older homeowners struggling to make ends meet
Newly retired with adequate income and high lifestyle expectations
Approaching/in retirement and financially comfortable (‘aspirational’ cases)
High income, high asset base looking to mitigate tax liability
Source – SHIP & Mintel Equity Release Report, May 2011.
Product innovation
Innovation essential to stimulate market recovery
Focus on ERCs
Inheritance protection
Interest repayments
Flexible drawdown options
Additional guarantees
Impaired lives
Reduced minimum ages
Mix and match
Intermediaries play a vital role
Share of Equity Release Sales by Distribution Channel
120
100
Percentage
80
47
37
33
37
22
11
Direct
60
Intermediary
40
53
63
63
67
2007
2008
2009
78
89
20
0
2006
2010
2011
Year
Source – SHIP (Mintel Equity Release Report May 2011 and SHIP 2011 year-end figures)
Any questions?
About LV=
For financial adviser use only.
Not to be used after 5 April 2012
LV Equity Release Limited, Keynes House, Tilehouse Street, Hitchin, Herts,
SG5 2DX.
LV= is a registered trade mark of Liverpool Victoria Friendly Society Limited and a
trading style of the Liverpool Victoria group of Companies. LV Equity Release
Limited is registered in England (No 1951289) and is authorised and regulated by
the Financial Services Authority (register number 306287). Registered address:
County Gates, Bournemouth, BH1 2NF. Tel: 01202 292333.
21223709 01/12
About LV=
For financial adviser use only.
Not to be used after 5 April 2012
LV Equity Release Limited, Keynes House, Tilehouse Street, Hitchin, Herts,
SG5 2DX.
LV= is a registered trade mark of Liverpool Victoria Friendly Society Limited and a
trading style of the Liverpool Victoria group of Companies. LV Equity Release
Limited is registered in England (No 1951289) and is authorised and regulated by
the Financial Services Authority (register number 306287). Registered address:
County Gates, Bournemouth, BH1 2NF. Tel: 01202 292333.
21223709 01/12
About LV=
For financial adviser use only.
Not to be used after 31 July 2012
LV Equity Release Limited, Keynes House, Tilehouse Street, Hitchin, Herts,
SG5 2DX.
LV= is a registered trade mark of Liverpool Victoria Friendly Society Limited and a
trading style of the Liverpool Victoria group of Companies. LV Equity Release
Limited is registered in England (No 1951289) and is authorised and regulated by
the Financial Services Authority (register number 306287). Registered address:
County Gates, Bournemouth, BH1 2NF. Tel: 01202 292333.
21223709 01/12