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Market Stats & Potential

Market Stats & Potential. So why do people release equity?. Source: LV=. Current trends. Supporting family is a growing category: School/university fees House deposits Weddings Divorce settlements Source: LV=. Current trends. The ‘luxury purchase’ is showing signs of recovery:

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Market Stats & Potential

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  1. Market Stats & Potential

  2. So why do people release equity? • Source: LV=

  3. Current trends Supporting family is a growing category: School/university fees House deposits Weddings Divorce settlements Source: LV=

  4. Current trends The ‘luxury purchase’ is showing signs of recovery: Purchase of holiday home/caravan/motorhome Property development Financing business ventures Extended holidays Source: LV=

  5. Unusual cases And some of our more unusual cases… Face lift Cosmetic dentistry Solar panels Charity rally driving trip Source: LV=

  6. Case study – property purchase Pension not enough to cover regular bills Still working part-time Had a fall – unable to maintain property Retirement development – great location and support package available Needed cash to make up shortfall in purchase price Simultaneous purchase and release of equity

  7. Case study – delaying moving home Properties in UK and Portugal Income from overseas property reduced Cost of UK healthcare insurance increased, value of shares decreased Unwilling to sell either property at a loss Cash released has paid healthcare premiums and offset loss of income from overseas property

  8. Case study – helping grandchildren Inherited property – needed external and internal works Wished to contribute towards grandson’s school fees Took a larger initial sum to pay for work to property Releases smaller tranches to pay each term’s fees

  9. How has this market performed? Key points: Peak in volume and value 2007 Followed by mortgage ‘crash’ of 2008 2009- introduction of drawdown arrangements 2011 – total value of plans is down slightly over 2010, but the final two quarters showed a strong recovery. In fact, the Q4 performance was the strongest for two years The green shoots of recovery? • * Assumes house prices remains static • Figures from Mintel Equity Release Report, May 2011 and SHIP press release January 2012

  10. And the future? Key points SHIP, lenders and advisers alike are working very hard to raise profile of equity release Increasing recognition that ER needs to be one of the cornerstones of retirement planning We believe the future is bright for equity release • * Assumes house prices remains static • Figures from Mintel Equity Release Report, May 2011 • Note that the 2011 figure used here was Mintel’s estimate only and they have used this to project forward to 2015. 2011 figures were lower than estimated

  11. Future market potential So, why do we think the future is bright? UK population will continue to expand and age, putting further pressure on public funds Lower than expected investment returns Low pension participation and falling annuity rates Rising cost of care Longer life expectancy Property prices can generally be relied on to grow over the long term

  12. The market has changed There is no longer a single market for equity release ‘but rather several markets, defined by different customer, product and advice needs’ Six main customer types: 55+ with long term care needs (ineligible for state-funded care) Vulnerable low-income older homeowners with debts (‘last resort’ cases) Low-income older homeowners struggling to make ends meet Newly retired with adequate income and high lifestyle expectations Approaching/in retirement and financially comfortable (‘aspirational’ cases) High income, high asset base looking to mitigate tax liability Source – SHIP & Mintel Equity Release Report, May 2011.

  13. Product innovation Innovation essential to stimulate market recovery Focus on ERCs Inheritance protection Interest repayments Flexible drawdown options Additional guarantees Impaired lives Reduced minimum ages Mix and match

  14. Intermediaries play a vital role Source – SHIP (Mintel Equity Release Report May 2011 and SHIP 2011 year-end figures)

  15. Any questions?

  16. About LV= For financial adviser use only. Not to be used after 5 April 2012 LV Equity Release Limited, Keynes House, Tilehouse Street, Hitchin, Herts, SG5 2DX. LV= is a registered trade mark of Liverpool Victoria Friendly Society Limited and a trading style of the Liverpool Victoria group of Companies. LV Equity Release Limited is registered in England (No 1951289) and is authorised and regulated by the Financial Services Authority (register number 306287). Registered address: County Gates, Bournemouth, BH1 2NF. Tel: 01202 292333. 21223709 01/12

  17. About LV= For financial adviser use only. Not to be used after 5 April 2012 LV Equity Release Limited, Keynes House, Tilehouse Street, Hitchin, Herts, SG5 2DX. LV= is a registered trade mark of Liverpool Victoria Friendly Society Limited and a trading style of the Liverpool Victoria group of Companies. LV Equity Release Limited is registered in England (No 1951289) and is authorised and regulated by the Financial Services Authority (register number 306287). Registered address: County Gates, Bournemouth, BH1 2NF. Tel: 01202 292333. 21223709 01/12

  18. About LV= For financial adviser use only. Not to be used after 31 July 2012 LV Equity Release Limited, Keynes House, Tilehouse Street, Hitchin, Herts, SG5 2DX. LV= is a registered trade mark of Liverpool Victoria Friendly Society Limited and a trading style of the Liverpool Victoria group of Companies. LV Equity Release Limited is registered in England (No 1951289) and is authorised and regulated by the Financial Services Authority (register number 306287). Registered address: County Gates, Bournemouth, BH1 2NF. Tel: 01202 292333. 21223709 01/12

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