Recent data has revealed that UK equity release lending has more than doubled over the last two years.
According to the Equity Release Council, the first quarter of 2018 saw total lending reach £870 million, with the value of quarterly lending growing by a quarter year-on-year. In comparison to the first three months of 2016, the total cash unlocked through property has grown by 120%, from £394 million.
The number of new customers has also seen a rise of 22% over the same time frame, which the Council has put down to the flexibility of new and innovative products. Since 2016, the number of new customers has grown from 5,175 to 10,195 – an increase of 97%.
Compared to the final three months of 2017, Q1 of this year saw the initial instalment on a drawdown lifetime mortgage, on average, grow by 4% to £64,785. In contrast, the average lump sum life mortgage saw a drop of 5%, down to £96,483.
The figures indicate that for those aged 55 and over, equity release has become a more common way of boosting income in later life, reflected in the extent of activity observed over the last two years. According to the statistics, every day of quarter 1 last year saw £9.7 million of housing wealth unlocked. This can be compared to Q1 of 2016, which saw £4.3 million released each day.
Commenting on the statistics was David Burrowes, chairman of the Equity Release Council. He said: ‘It is clear that equity release has become an increasingly useful and flexible financial planning tool for older home owners. While pensioners’ income is on the rise, a potential over reliance on private pensions could lead to a retirement income shortfall in the future. New sources of income in later life are increasingly being sought, and this highlights the need for a rounded approach to retirement planning which considers all wealth, assets and product choices.
‘Equity release provides financial help for consumers in a wide range of circumstances, including some looking to pay off interest only mortgages and others wanting to make home improvements or adaptations and fund social care needs in the comfort of their own homes. It can also help financial issues across generations.
‘Given that nearly 70% of all homeowner equity belongs to households aged 55 and over, it is inevitable that housing wealth will need to be used to help get the next generation onto the housing ladder. Equity release provides a valuable mechanism to provide this as a ‘living inheritance’.
‘With demand continuing to grow, equity release is providing solutions to a wide array of customer needs. As well as working closely with policy makers to inform decisions on social care funding and the single financial guidance body, The council continues to focus its efforts on upholding the highest standards of consumer protection that underpin confidence in the growing later life lending arena.’
