I am off this morning to the Equity Release Summit to talk on a plenary panel at 10 am.

I’m not speaking as an expert on equity release but as someone who’s Mum’s and sibling’s lives have been made the better by a lifetime mortgage secured by an insurer through a very good adviser. My tale incorporates the good and the bad of the purchasing experience since we previously had a bad experience with another life company and its tied agent, both of whom made my family pretty upset.

In the meantime we lost a low interest rate and had to pay a high one, as mortgage rates rocketed. We completed in January 2023 – our IFA was Kevin Hull of Later Life Lending – I am very glad we did and will thank Kevin at this event.

Our experience is one of a relatively few over the period of our loan application.

According to Carlton Hood, CEO of Responsible Life (now part of Royal London) money released to homeowners through lifetime mortgages fell off a cliff from £6.2bn  in a year prior to 2022 to £2.6bn a year later.  That is not a numerical palindrome, that’s a fact. Demand for equity release has fallen off a cliff – one of the reasons that Responsible Life is now part of Royal London.

This projection, established in 2021, has not turned out as predicted

Equity release is no longer “cheap”, money is a lot more expensive,  nevertheless, the price my mother is paying for the money is cheap, relative to the happiness she and my brothers are getting.

Sadly, the supply of good quality advice is not increasing, this comments is from a March blog on this subject and comes from Mark Meldon

The mortgage broker I recommend to clients (having long ago left the mortgage market myself) has 60+ years of experience – he really is working into his 80s, but has younger colleagues – left the ER market last year. The reason? Soaring professional indemnity insurance costs, which I understand has made many brokers exit.

My conclusion from our dealings is that the sale and establishment of equity release is critically important and that the more the Equity Release Council can do to make the experience a good one for the elderly people involved, the more – over time – will be sold.

Equity release is not just a vital product for those in later age with illiquid assets but little means to pay the bills, but vital to the insurance industry which is currently struggling to find assets to match the demand for annuities (personal and especially bulk).

My understanding is that the supply of high-grade corporate bonds is weak, spreads are tight so there are insufficient bonds to go round. Sales of equity release products are low, because interest rates are high and consumers are waiting for them for them to come down again. Without the assets (bonds and lifetime mortgages) the capacity of insurers to meet annuity demand is constrained. So getting the sale of equity release right to people like my Mum is important at a macro level.

I will spend some time at this conference as I am keen to better understand the link between lifetime mortgages and lifetime income. The AgeWage banner is part of a one-stop pension shop – whose aim is to ensure more people have access to wage in later age.

My first insurance sales boss told me that “you can’t buy a sausage with a brick”. Back in 1984 you couldn’t get a lifetime mortgage from an insurance company. In the 40 years that have passed, we have found ways to unlock equity from our homes, but sadly, only a small number of those eligible and in need of this kind of finance , complete on the financing deal.