The current global market cap for “equity release” products, including reverse mortgages, could hit $50 billion by 2033, more than doubling its current size. This is according to a report compiled by the European Pensions and Property Asset Release Group (EPPARG), a trade association that represents European equity release companies.
“The report gathers data from market leaders across 13 countries globally with established or developing equity release markets, and [analyzes] growth potential,” the association said in a statement. “The 13 countries span Europe, North America and Australia, and are considered to be amongst the largest equity release markets in the world.”
Living expenses and inflation are two key factors that further communicate the need for equity release products, the organization said.
“Among the countries [analyzed], over $17 billion of equity is currently released each year for homeowners, but this is expected to increase dramatically by 2033, when the global equity release market is expected to reach $50 billion in annual releases,” the study found.
Reverse mortgages — albeit under a different moniker — have a large share of representation in the report, according to the findings.
“The most common type of equity release is the lifetime mortgage, which is available in the majority of countries covered by the survey, followed by home reversion schemes,” the report said.
The response in the U.S. to the report’s content should be positive, according to an attached statement from Steve Irwin, president of the National Reverse Mortgage Lenders Association (NRMLA).
“Housing wealth remains one of the greatest assets for the vast majority of the ever-increasing global population of older homeowners, and the ability to access that equity, under the right circumstances, is the key to enabling a more secure retirement,” Irwin said.
“As this marketplace expands and matures, which is clearly anticipated by the marketplace study, it will be necessary for participants to ensure consumer protections and education remain as a solid foundation of the product offerings.”
EPPARG itself was also encouraged by the findings, according to Steve Kyle, secretary general of the organization.
“We are very much encouraged by the results of our latest survey, which confirms that equity release has an increasing role to play at global level in allowing elderly homeowners to draw on their own home as an asset to finance a decent and comfortable retirement,” Kyle said in a statement.
“We will be continuing to build awareness of equity release products internationally in view of the significant social and economic benefits that they bring.”