New Investment Opportunities Thanks to a Sustained Period of Depressed Financial Returns
Falling returns in many traditional investment areas have forced both shorter-term and longer-term investors to engage more extensively in higher-risk areas. In this search for yield, new sources of funding have entered sectors previously considered to be too niche and/or to complex, further pressuring the returns available to traditional funders. A couple of examples:
- A substantial amount of new capital has arrived into the UK equity release market, helping fuel a 25% annual growth rate in the value of the sector since 2012 to reach over £3 billion and over 37,000 new customers in 2017, and £3.6 billion in 2018, a further growth of 19% from an already substantial base.
- Second charge mortgage lending is another formerly niche market that is becoming increasingly mainstream in the U.K. It has witnessed substantial growth in the past few years, with the Finance and Leasing Association stating that the market’s total value grew to over £1 billion for the 12 months to December 2018.
Check out the ”Lower for Longer: Have Low Base Rates Permanently Changed Financial Services?” paper from L.E.K. Consultancy.