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Claudio Pacella, CEO of 65Plus – Gruppo Mutuionline in Italy and an EPPARG Board Member, explains how the signature of the first funding agreement between Centro Finanziamenti and international investors represents a game-changer for the Italian market, with an estimated overall market opportunity in excess of €2 billion.

How would you describe the shape of the equity release market in Italy at the beginning of 2024? 

It is very important to distinguish between the vision we may have of the “historical” market of lifetime mortgages and its prospective vision. In fact, Centro Finanziamenti signed the first funding agreement with international investors; this is going to be a “game-changer” for the Italian market, since a lack of funding has always been the real bottleneck. 

This is why 2024 is going to be a turning point and a strong discontinuity with the past: Centro Finanziamenti’s new lifetime mortgage is landing in the market as the first “open market” product, offered through third-party networks such as banks, financial companies, networks of agents and brokers. For some partners, a “white label” version will also be offered, which allows for the customization of the entire marketing and communication phase. These aspects are turning a small “multi-captive” market into a fully open market that now can fulfil the real market potential for volumes.

What has been the impact of the challenging global economic context on the Italian equity release market? Are you seeing some particular trends?

The global environment in 2023, with an unprecedented increase in financial rates, slowed down all credit volumes, including lifetime mortgages; therefore, lifetime mortgages have also been negatively impacted. However, looking ahead to 2024, a substantial stability in rates is expected together with the beginning of a material reduction: this also will help in adding a positive momentum to the market.

How do you see the current demand for equity release products in Italy and how can this be stimulated further? What is the role to be played by distributors, commercial banks, consumer associations or other organisations in building awareness and understanding of the product?

The demand for lifetime mortgages remains very high, similar to the UK market, although it is currently unexpressed. To this end, the role of distributors is a key element to increase the visibility of the product; we do not expect to see highly visible retail communication campaigns (B2C). For this reason, the role of distributors in peer-to-peer communication with customers becomes a key element. We have heavily invested in training and monitoring distribution networks and therefore we are confident that the process will proceed smoothly.

What more can be done to encourage investors to take a greater interest in funding equity release in Italy? How would you describe the market potential in Italy, in view of the ageing population?

The Italian market is undoubtedly one of the most interesting in the European context: high population density, the highest average age in Europe, a non-volatile real estate market, regulations consolidated in the last 15 years and no negative events in reputational terms. For all these reasons, the market to be seized in Italy is in excess of €2 billion. The best communication to investors will be the actual results of this new “open market”. Also for investors, the first mover will have an undoubted competitive advantage. 

What are your predictions regarding the prospects for the equity release market in Italy in 2024?

Centro Finanziamenti and 65Plus leading this change in the market will accelerate the whole longevity economy sector. The more visible side will be the distribution front, while there a centralized management, for the first time, will enhance adequate economies of scale.