Equity Release Expert Mike Hardy’s Latest Market Update Reveals Challenges and Optimism

by | Friday 8th Sep 2023 | Mortgage News

As part of Oportfolio Mortgages’ effort to help clients with diverse mortgage needs, we partner with a specialist equity release company who we refer all of our equity release enquiries to. Very fittingly called ‘The Equity Release Experts’. In a recent market update, Mike Hardy, a seasoned advisor, shed light on the current state of the equity release market in the United Kingdom. Hardy’s insights provide a comprehensive view of the industry’s performance, challenges, and potential opportunities. Despite facing some hurdles, he remains cautiously optimistic about the future.

A Challenging Second Quarter For Equity Release

Mike Hardy began his update with a sobering statistic: “Total lending for the 2nd quarter of the year came in at £664m, which was not only 5% down on the previous quarter but was the lowest recorded figure since Q3 2016.” This decline raises concerns about the market’s immediate health. Traditionally, the second half of the year tends to be more robust than the first. However, Hardy expressed scepticism, stating, “I would be very surprised if that was the case and expect potentially that the figure for Q3 will be lower again.” This sentiment paints a challenging picture for the equity release industry’s short-term outlook.

Silver Linings Amidst the Challenges

Despite the concerning figures, Mike Hardy finds room for optimism. He argues, “Whilst it would appear all the news is very negative; I actually think the figures are not that bad considering where rates currently sit.” Indeed, when comparing the current market conditions to those seven years ago when rates were around 6%, the industry has shown remarkable resilience. Hardy recalled, “I’ve now been advising for 7 years, and when I started, rates were around 6%, and the total borrowing for the year was just over £900m.” Today, even with rates still starting with a 6%, the potential total borrowing for the year could exceed £2 billion. This growth rate is commendable and speaks to the industry’s adaptability.

He also highlighted positive developments in the equity release landscape. “During the period of growth, lots of good things have happened which are here to stay. New lenders have come, which brings competitiveness in the market on pricing, and products are far more flexible than they were seven years ago.” These changes suggest that the equity release market is evolving and becoming more consumer-friendly.

Shifting Trends in Borrowing

One notable shift in borrowing trends mentioned by Mike is the changing nature of loan purposes. He observed, “Sadly, while I have been able to help people this year, the nice loans have started disappearing like gifting, holidays, and taking money for clients to enjoy. These have been replaced with debt consolidation and needs-based lending.” This transformation reflects the evolving financial needs of homeowners.

Another trend Hardy highlighted is the increasing use of equity release when moving homes. “I have seen a growth in people using equity release when moving home and think this trend will continue to do so,” he noted. Even if house prices decrease, for those looking to buy in a similar area, equity release can be a valuable financial tool.

Rate Expectations and Future Outlook

Addressing the issue of interest rates, Mike Hardy stated, “Do I see rates reducing in the short term, no, but the cynic in me tells me that the closer we get to the general election next year, they might start to come down slightly as our rates are more linked to government borrowing (15-year gilt rate) than the Bank of England base rate.” He emphasised that only time will tell if this prediction comes true.

Hardy believes that a reduction in the cost of borrowing would ignite activity in the equity release market. “Reduction in the cost of borrowing will definitely fuel activity and get the people who are currently on hold, wanting to revisit things again,” he concluded, expressing hope for a brighter future for the industry.

In conclusion, Mike Hardy’s market update paints a nuanced picture of the current state of the market. While challenges exist, there are also positive signs of growth, flexibility, and adaptation within the industry. As interest rates and market conditions continue to evolve, the equity release sector will undoubtedly remain a key player in the UK’s financial landscape. If you or anyone you know is interested in discussing an equity release mortgage, then please drop us a message or give us a call and we will be happy to refer you on to The Equity Release Experts. 

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