SHIP Member Survey: Equity Release Industry Predicts Consumers Will Be The Big Winners In 2006

Equity release consumers have benefited from low interest rates and increased competition between providers in 2005 but providers expect this to be even better in 2006.

Safe Home Income Plans (SHIP), the trade body representing 18 providers and over 95% of the equity release sector by volume, today released the results of the first SHIP Member Survey, conducted at the end of 2005, is the most comprehensive view ever of the equity release industry and represents the options and predictions of the majority of providers in the UK.

Product Innovations:

Most SHIP members predict that the equity release sector will become more competitive for the first quarter of 2006. All those surveyed also believed that equity release interest rates would either stay the same or decrease in 2006. This will mean consumers will benefit from cheaper deals as providers compete with each other to attract new business.

Of the product features currently available, the survey found that flexible drawdown facilities were highest on the list of attractions for equity release customers. Historically low interest rates and good loan to value (LTV) rations are also popular with current applications.


Top three current product features: 


Flexible drawdown

2 Low interest rates
3 Good loan to value (LTV) percentage

And the news gets better for consumers! 2006 will see even greater flexibility in equity release products according to SHIP members. Set up costs, fees and early repayment charges are also widely predicted to fall. Other features that may arrive this year include a lower entry age, secure income options and the ability to rent out a property.

 Predicted new product features in 2006:

1 Increased flexibility
2 No early repayment charges
3 Lower fees
4 Lower interest rates
5 Secure income options
6 Pensions tax planning
7 Low/no fee remortgageing

New entrants:

SHIP members also predicted that major financial players will enter the market on the future, with HSBC, Barclays, Nationwide, Lloyds TSB, RBS and Halifax all predicted to being offering equity release products. Interestingly, despite growing fears over a pensions shortfall, none of the SHIP members surveyed believed that the Government would offer this own equity release product as a solution to this.


The survey found that almost all SHIP members predict strong growth in the equity release sector in the next few years. In 2004, SHIP members wrote £1.2bn of new business predictions for 2006 average £1.4bn and range from £1.15bn to £1.65bn. Forecasts for 2008 are even healthier, averaging at £2.4bn with a range between £1.4bn to £3.8bn.

Long Term Care:

The majority of SHIP Members believe that a product should be designed to meet long term care needs and such a product is expected to be offered within the next four years. However, some SHIP members are opposed to offering a long term care products as they believe they are two separate products and should be treated as such.

Jon King, Chairman of SHIP commented

“2005 has been very positive year for the equity release industry with low interest rates, growing Consumer demand and new providers entering the market all helping bring equity release into the financial mainstream.

The SHIP Member Survey shows that 2006 is likely to be even better for consumers with greater flexibility, lower cost and continued product innovation. With home reversions coming under FSA regulation as well as lifetime mortgages helping to bolster confidence in the sector the future looks bright for equity release.”