Annual equity release lending worldwide is forecast to reach $52 billion by 2035, almost three times its current level, according to research from the European Pensions and Property Asset Release Group (EPPARG) and EY.
The fourth Global Equity Release Survey estimates that homeowners currently release $17.7 billion annually across the markets examined, with North America expected to account for much of the growth over the next decade.
The report draws on data from established and developing equity release markets across 14 countries and cities in Europe, North America, Australia and Hong Kong, which participated for the first time.
Despite economic and geopolitical pressures, the research suggests that demographic changes, particularly ageing populations, will support growing demand for products that allow older homeowners to access housing wealth.
FUNDING AND PRODUCT TRENDS
Banks remain the principal source of finance for equity release providers internationally, followed by securitisation, insurance companies and debt funding.
Domestic funding is available in most of the markets surveyed, although Italy and Ireland were identified as exceptions. Most respondents expect domestic funding capacity to increase, but access to finance remains a constraint in some European countries, where greater institutional investment is seen as necessary to support expansion.
Lifetime mortgages remain the most widely used form of equity release globally, although home reversion arrangements have developed a stronger presence in Germany and Poland.
Lump sum advances continue to dominate product demand internationally. However, combinations of lump sums and annuity payments are particularly popular in France and Hong Kong, while drawdown and annuity-based arrangements are available in several other markets.
Eligibility also differs between countries. Equity release is generally available from age 55 in the UK, North America, Australia and Hong Kong, compared with minimum ages typically ranging from 60 to 65 across much of Europe.
The research also points to increasing investment in technology, with all respondents expecting to use digitalisation, automation or artificial intelligence for customer due diligence and marketing within five years.
Improving consumer understanding was identified as the most common requirement for further market development, alongside greater awareness among financial advisers and other industry professionals.
PRESSURE ON RETIREMENT FINANCES
Steve Kyle, secretary general of EPPARG, said ageing populations will increase the importance of housing wealth in retirement planning, but argues that appropriate consumer safeguards and greater funding availability will be essential.
He said: “We strongly believe the challenges of ageing populations in many countries will lead to unsustainable social, economic and intergenerational costs.
“A safe equity release market has a vital role to play in later life lending and planning, with many elderly homeowners across the globe wishing to remain independent for longer.”
Kyle also called for additional investment in European equity release markets, where funding constraints continue to restrict development.
He added: “Since a lack of funding remains a major barrier to growth in a number of European countries, we would like to encourage the involvement of socially aware funders and investors to enter this space which will drive both commercial and social benefits.”
Ben Grainger, partner at EY, said: “Momentum is growing in the European equity release market with cross-border funding relationships starting to give equity release providers the firepower they need to scale.
“We look forward to continuing to support global collaboration in this sector and unlocking the potential of equity release to transform retirements around the world.”
UK RETIREMENT FUNDING GAP
The Equity Release Council said the findings were consistent with its expectations for the UK later life lending market, where insufficient retirement savings could encourage more homeowners to consider accessing property wealth.
Jim Boyd, chief executive of the Equity Release Council, said: “With estimates that £15 million UK citizens have inadequate savings to achieve a moderate standard of living in retirement, there is recognition that property wealth must form a part of any retirement funding solution.
“Indeed, the UK’s regulatory body, the Financial Conduct Authority, has described housing wealth as the ‘fourth pillar’ of retirement planning, alongside pensions, savings and investments.”
Boyd also emphasised the importance of consumer protection and established industry standards in supporting sustainable growth.
Steve Irwin, president of the National Reverse Mortgage Lenders Association, said: “Retirement security is coming under increasing pressure worldwide as aging populations and persistent inflation place greater strain on traditional retirement systems.
“This report offers a measure of optimism by highlighting the growing importance of housing wealth as a source of financial security.”
The survey was adopted at an EPPARG meeting in Madrid on 29 September, hosted by Spanish equity release advisory and actuarial consultancy Óptima Mayores.
