Equity release market sees Q4 dip in new customers – report

New and returning equity release customers in Q4 totalled 13,651, down from 17,078 in Q3 2023 and 20,597 in Q4 2022, according to the Equity Release Council’s report.

Throughout 2023, 26,119 customers took out new equity release plans, with drawdown plans restored as the majority preference – attracting 53% of customers last year and 55% in Q4. The average amount borrowed by new customers in Q4 2023 was £79,484, compared to £106,917 a year prior.

With smaller loan sizes and the ability to make voluntary partial repayments on all new plans, customers are better able to manage their exposure to higher interest rates. 2023 saw 64,448 active customers taking out new plans, making use of drawdown reserves or agreeing extensions to existing plans, down 31% year-on-year.

What’s more, the total annual lending of £2.6bn in 2023 followed a record-breaking £6.2bn in 2022, returning the market to the level of activity last seen between 2016 to 2017 (£2.1bn to £3.1bn). Commenting on the report, Mark Gregory, Founder and CEO of Equity Release Group, said:

“Heading into the midst of Q1, opportunities continue to arise this year, particularly for advice firms looking to enhance their systems and generate greater efficiencies for their business in line with Consumer Duty.

The work we have put in to our technology and systems throughout 2023, has enabled us to head into 2024 favourably, as we continue to drive forward. We have experienced an uplift in enquiries and applications this month in comparison to January 2023, with applications up 41% and average loan size up 80%. This is reflective of our whole of market advice approach with more RIO & TIO enquiries, plus the rise in Lifetime Mortgage LTVs and the demand for greater flexibility in retirement.

Whilst the next few months are still going to be tough and present challenges for the industry, we’re heading in the right direction to get back on track.”

David Burrowes, Chair of the Equity Release Council, said:

“It’s clear some people are holding out for future rate cuts, but with no timeline as to when this may happen or how sustained this will be, older homeowners will need to continue to consider what is right for their individual circumstances. Many people are relying on their property wealth to retire in comfort, and we are focused on ensuring they can access it confidently and securely.

Whether the customer wishes to top up their pension, support their family or manage their borrowing in retirement, today’s products offer more flexible options to help manage costs, with voluntary repayments baked into every new plan. Ultimately it is about choice and it is vital that people plan carefully for the future and only commit to long-term products after careful consideration, expert advice and consulting with loved ones.”

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