- More than half of advisers say switching inquiries are rising
- But more lenders are needed to maintain market growth
Equity release rate cuts are driving increased inquiries about switching plans from existing customers, research* from national specialist Bower Retirement shows.
Its study found 53% of advisers have seen a rise in clients looking to move their existing deal to a lower rate with 12% reporting a substantial increase in interest from customers looking for lower rates.
Increased competition among existing lenders and new companies entering the growing market have meant rates falling to new lows – average rates are currently around 5.66%** and have fallen by nearly 1% in the past three years while the number of plans available has nearly trebled over the same period.
Currently providers have historically low rates with some lenders offering deals below 4.3% potentially enabling existing customers to move their plan.
However Bower’s study found advisers believe the market needs more competition if it is to maintain recent strong growth – around 78% questioned said new lenders coming into the market would be the best way to maintain momentum.
Advisers also want to see more innovation with 34% calling for more retirement lending while the same number said further rate cuts would be the best way to continue market growth – the Equity Release Council has forecast the market will exceed £2 billion for the first time in 2016.
Andrea Rozario, Chief Corporate Officer at Bower Retirement said: “Increased competition in the market with new lenders such as Legal & General and OneFamily launching has meant rates have fallen significantly as the market has grown.
“That is reflected in the growing interest in switching plans but it is vital that customers considering moving get independent advice as any savings from lower rates need to be balanced against any early redemption charges or other costs.
“New lenders coming into the market demonstrate the growing demand there is but it is also clear advisers want to see more providers launching this year to further enhance competition.”
Bower Retirement is focusing on increased use of technology and service for customers and partners as it focuses on continued growth and recruitment of advisers.
The firm has enhanced its service for the growing retirement planning market with the launch of new online tools. New services include video guides for customers and potential new recruits as well as online chat services for customers and a focus on ensuring customers are offered as wide a range of solutions as possible. Videos are hosted on YouTube