Growth in the equity release market has been driven by innovation as the number of available products more than doubled over the past two years, the Equity Release Council has said.
In its Autumn 2018 Equity Release Market Report released today (24 September), the council found 139 products are currently available in the later life lending market - compared with 58 options in 2016.
It also found increased product choice continued to drive down pricing in the equity release sector, with the average interest rate sitting at 5.22 per cent in July 2018 compared with 5.96 per cent the previous year.
David Burrowes, chairman of the Equity Release Council, said the innovation had brought more competition to the later life lending arena, while standards had also been maintained.
But he said more needed to be done to signpost consumers to advice and guidance.
He said: "As customers navigate their way through a growing range of product choices – including retirement interest-only mortgages – the appropriate advice, guidance and support is needed to weigh up the various benefits, costs, flexibilities and protections to ensure they are suitable to meet both current and future needs.
"Industry and regulators must continue to work to ensure customers are aware of all the options available to them when deciding how best to support themselves and their families in later life, taking all their assets – including pensions, savings, investments and property – into consideration."
The report found the increase in product choice matched the expanding base of equity release customers, which had grown by 81 per cent from the first half of 2016 to the same period in 2018.
The council largely attributed the potential for growth to more people looking to supplement savings and meet social needs such as care costs and intergenerational lending - with the number of homes in England bought with a gift or loan from a family member of friend recently reaching a record high of 1.1 million.
Dave Harris, chief executive officer at More 2 Life, said: "One of the keys to continued growth for the equity release market will be finding a greater variety of funding for lenders to help stimulate further product innovation.
"The industry has traditionally been funded by life insurers, but that pattern is beginning to change as other organisations such as pension schemes and asset management firms, turn towards the equity release sector as a good source of investment return.
"A wider range of funding like this will not only drive product innovation but as result will lead to increased competition and ultimately, flexibility of choice for consumers."