More than three quarters of advisers believe that the biggest barrier in the equity release market is negative perceptions about the product, Canada Life has revealed.
The industry faces a challenge to overcome consumers’ negative view of equity release, which advisers said has been influenced by adverse news stories.
The 77% of advisers who selected this option as the biggest barrier to equity release market growth is more than double the number of advisers who selected this option in 2016 (38%).
Alice Watson (pictured), head of marketing – insurance at Canada Life, said: “It’s clear that advisers, who speak to consumers every day, believe that scare stories are putting people off equity release.
“Unfortunately, these stories can misrepresent an industry that has moved on a lot since some of the more infamous reports in previous decades.
“Today, the industry has established strong consumer safeguards and mandates independent legal advice for every homeowner aged 55 and over who’s considering taking out equity release.
“In order to improve the public’s perception of equity release, we need to improve consumer understanding.
“Canada Life’s ‘Equity Release Explained’ brochure is aimed at friends and family members and outlines the key information about lifetime mortgages – a type of equity release – which people can share with those closest to them.”
The second-biggest market barrier is poor consumer awareness of equity release, which 44% of advisers believe is hampering the industry.
Consumers reportedly suffer from a lack of understanding of equity release, with 15% of homeowners saying they wouldn’t use the product to fund their retirement because they don’t understand it.
The most popular consumer misconception is held by one in five (21%) homeowners, who think that taking out equity release means losing control of their home.
Other popular misconceptions include assumptions that equity release prevents you from being able to leave an inheritance, and that releasing equity from your home could mean that you owe more than the value of your property.
Watson added: “Customers who meet the terms and conditions of their loan will remain in control, and certainly retain ownership of their property.
“Canada Life equity release products also come with a ‘No Negative Equity’ guarantee, so that loved ones are never left any debt or asked to pay a shortfall.
“Sustained innovation has seen many new products come to the market, which offer flexibility and certainty.
“This has allowed thousands of customers to choose an equity release product that allows them to make payments to reduce the impact of interest roll-up.
“Although consumer myths remain common in equity release, we expect them to reduce as the industry works to educate audiences and explain how the products actually work.”