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Advisers’ confidence in equity release undeterred by the RDR
79% of advisers still confident despite the withdrawal of some lenders and advisers from the market.
In its latest IFA confidence report, Hodge Lifetime, the UK’s longest established equity release provider, has found that just 2% of IFAs questioned felt that the RDR would lead to a decrease in sales when it comes into place in 2012. Sixty-four percent felt that it would have no effect on sales, and 12% felt that it would actually increase sales.
Suggesting a general atmosphere of confidence in the future of equity release, many advisers also claimed to have seen an increase in equity release applications over the past three months. Most notably, 28% of IFAs that advise on home reversion plans reported a marked rise. Following trends from last Autumn, Hodge Lifetime’s report also found that 79% of advisers still claimed that the withdrawal from the market of some lenders and advisers has not affected their confidence.
Planning for the Future
Looking further into 2010 and beyond, findings also highlighted the nature of the use of equity release going forward. While 31% of advisers are now writing up to 50% of their business for clients using equity release for debt consolidation, only 10% of advisers wrote over 60% of their business for this purpose.
Sixty-four percent of those questioned also predicted an increase in interest rates over the next quarter, a slight rise on the 60% reported in Autumn 2009, and an area of interest as decisions from the Bank of England become less predictable.
Considering their own businesses over the coming months, and increasing client numbers, 31% of IFAs plan to increase networking with local solicitors and mortgage advisers, 23% intend to obtain referrals from existing clients and 15% plan to undertake more direct marketing within their immediate local area.
Jon King, Managing Director at Hodge Lifetime commented:
“The continued confidence of IFAs and faith in the growth of the sector is encouraging for the equity release market. Hodge Lifetime works with a broad range of IFAs from small to very large organisations, so it is particularly interesting to see such confidence about the sector following the future impact of the Retail Distribution Review.
“It is also positive to see that while debt consolidation is an increasing use of equity release, only a small percentage of advisers are writing a large portion of their business for this purpose, showing that equity release is not always the ‘last resort’ that it has sometimes been portrayed as.”
The Hodge Lifetime IFA Confidence Report is a quarterly report looking at the concerns/perceptions and issues expressed by IFAs operating within the equity release industry. The report uses survey data from over 30 independent IFAs from across the UK.
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