According to the Equity-release-graph, the product continues to grow apace. £1bn lent in the third quarter of 2018. But if the trend continues, it will lead to the first of the two problems I highlighted in this previous post. Lending will follow house price growth, house price growth will fuel the capitalisation model used by ERM firms, which will capitalise future predicted growth. This will then result in the second problem, namely that if the growth is not realised, it will go horribly wrong. Note ‘not realised’. It will go horribly wrong even if the growth is flat, and because of the large amounts lent, it will be horribly wrong in a horrible way.
You have to ask what the BoE, the guardian of financial stability, was thinking of when it approved these models in 2016. Actually I know what it was thinking of, but cannot say.