Global equity release market projected to top $56B by 2035

Equity release — a class of financial products that involve unlocking home equity and converting it into cash flow — currently has global annual volume of roughly $17 billion.

This class includes reverse mortgage products in the U.S., the United Kingdom and elsewhere, but a European equity release authority projects that volume will more than triple over the next 10 years.

By 2035, annual global home equity release volume will reach $56 billion, according to data released last month by the European Pensions and Property Asset Release Group (EPPARG) and Ernst & Young (EY).

The data was picked up by U.K.-based news outlet Mortgage Solutions, and the source report refers to reverse mortgages as “lifetime mortgages.”

The biggest market for equity release over the next decade, the report projects, will be the U.S. It predicts that volume in America will grow from $5.5 billion to $14.2 billion during that period.

Growth barriers described in the report are familiar to those operating in the U.S. reverse mortgage industry. The report lists such factors as lack of knowledge and/or awareness, constrained funding, elevated interest rates and other “market-specific barriers” inside various nations.

The chief priority for the industry at large is educational in nature, according to the report’s survey results.

“The most common theme was that respondents would like increased awareness; some regions suggested this could be done via promoting equity release as a viable retirement planning option through advisors and to reduce the sentiment that equity release is a last resort,” the report explained.

“Responses suggested increased awareness among institutions would help to break down misconceptions about the products available.”

In a statement to Mortgage Solutions, National Reverse Mortgage Lenders Association (NRMLA) President Steve Irwin offered his thoughts on the projections for the U.S. market.

“Ensuring a safe and financially secure retirement for our aging populations is something governments across the globe are aspiring to through public and private sector innovation,” Irwin said.

“The monetization of home equity is one solution that continues to gain traction as indicated through this very important report. We look forward to continuing our collaboration with EPPARG to share and explore best practices for monetizing home equity for this critically important endeavor,” he added.