2020 has seen a boom in new equity release products

This year, there has been a boom in new equity release products. Typically taken out by older homeowners, equity release has a lot of benefits. It has proven especially useful during the pandemic and the introduction of new products makes it available to a wider group of people.

Here, we’ll look at what equity release is and the new products that have been introduced onto the market in 2020.

What is equity release?

Equity release allows you to access the cash tied up in your home. It is designed for homeowners aged over 55 and there are a variety of products available. With equity release, you can choose from a single lump sum or smaller frequent payments. It’s a great way to enjoy retirement for those who have been paying their mortgage off for decades.

New products launched every 28 hours

According to a new report from Key Partnerships, new equity release products have been launched every 28 hours throughout 2020. Now, homeowners can choose from a staggering 525 plan options. This is up by 510 per cent since 2017, when there were just 86 plans on offer.

The Year on Year (YoY) change in the number of plans on the market increased by 67 per cent by the end of August 2020. In 2019, the entire year saw a staggering 96 per cent increase on the year before. This shows just how significantly the equity release market is growing.

A drop in interest rates

One reason why equity release plans are becoming so popular, is because of the decreasing interest rates. Due to the amount of competition on the market, companies are needing to introduce better, cheaper plans.

From June 2018 to August 2020, there has been a total of 12 per cent decrease in interest rates. It currently stands at an average of 4.05 per cent. Speaking of the findings, Jason Ruse, the Business Development Director of Key Group, states:

“While the equity release market – as with other sectors – has had to work hard to weather the current pandemic, we still have seen significant product innovation and development.”

While he agrees the amount of innovation is great for customers, he went on to highlight the importance of shopping around:

“It is important to ensure that when customers do look for support around how to access their housing equity, they consider all of their options and pick the right product for them.”

The amount of innovation taking place in the sector is beneficial to customers. Those who are looking to release the equity in their home should compare their options and seek professional advice to ensure they are making the best decision.