The Global Market
What's driving the need for Home Equity Release?
Several social, economic and demographic factors are driving a growing need for Home Equity Release (HER).
The combination of falling birth rates and rising life expectancy means that around the globe the proportion of the population aged over 60 is rising rapidly. Some examples:
% Population aged 60+
| Now | 2040 | |
|---|---|---|
| Australia | 16 | 30 |
| Canada | 17 | 33 |
| France | 21 | 35 |
| Germany | 23 | 37 |
| Italy | 24 | 46 |
| Japan | 23 | 45 |
| NZ | 16 | 30 |
| Sweden | 22 | 37 |
| United Kingdom | 21 | 34 |
| United States | 16 | 26 |
The growing 'Pensions Gap' between what is available (from state-sponsored and private pensions) and what is required to fund people in their retirement. Already in many countries current pension and public health care arrangements are not sufficient. The cost of providing public benefits to people over the age of 60 will grow steadily as the proportion of the population made up of older people grows:
Cost of public benefits (age 60+) as a % of GDP
| Now | 2040 | |
|---|---|---|
| Australia | 8 | 17 |
| Canada | 8 | 23 |
| France | 16 | 28 |
| Germany | 15 | 26 |
| Italy | 17 | 34 |
| Japan | 13 | 27 |
| New Zealand | 8 | 17 |
| Sweden | 13 | 23 |
| United Kingdom | 12 | 20 |
| United States | 8 | 23 |
Attitudes to family inheritance and the family home are changing:
- Older generations live longer and have their own financial needs to take care of.
- Meanwhile younger generations are often more affluent than their parents ever were.
- In many countries enormous growth has been experienced in property values. The value of 'the inheritance' is correspondingly far greater than in previous generations.
Expectations amongst older people to the right to a continued, high standard of living are growing.
- The baby-boomer generation has grown up in a consumer society and has expectations of maintaining lifestyle levels during retirement.
Releasing equity from the home to fund financial needs in retirement is increasingly becoming a normal and significant aspect of financial planning for retirement.
How big is the market?
Already in four countries, Seniors Money International recognises a growing international need for Home Equity Release products.
- Although it is hard to be specific about how fast this market is going to grow, industry monitors are forecasting 19 to 36% annual growth in new business in the UK HER market over the next 5 years compared with under 5% for the general mortgage market.
