Equity release boost welcome for brokers

Gemma Harle is managing director of TenetLime

The news that equity release enjoyed some growth last quarter is good news for the broking community.

Despite the lack of mortgage funding, I believe the future for equity release remains positive as the government increasingly seeks to find ways outside of state subsidy to fund old age care.

Many of the drivers for increasing the role of equity release in funding old age are in place. People are living longer and pension funds and savings are not in most cases substantial enough to pay for many years. Homes will once again become assets.

The Comprehensive Spending Review, while being light on the detail of cuts, devolved many high level budget savings to local authority level. This will consequently mean many services for the elderly could be affected.

Equally equity release may provide a vehicle for the high street to deal with the large amount of maturing interest-only mortgages that lack a repayment vehicle.

But it will not be plain sailing. If the anticipated cuts in the spending review drive down house prices in many areas of high public sector employment (particularly where this is as a proportion of overall employment) releasing equity from assets with declining value may become problematic. Equally declining home ownership across the nation will deprive many of the opportunity to fund their old age at all.