Sales of equity release plans have seen the biggest quarterly rise for 11 years, figures from the Equity Release Council have revealed, as more homeowners look to use their housing wealth to boost their finances in later life. Have you been one of them?
The figures show that equity release lending during the third quarter of the year rose by £68.3m compared with the previous three-month period, the biggest quarterly rise since 2004, with the total value of plans sold standing at £452.6m. Not only does this mark an annual increase of 21% (which is also the fastest annual growth rate seen so far this year), but it means that a new lending record has been set for the second successive quarter, with the equivalent of £5m of housing wealth being accessed every day.
It's a similar story when it comes to the number of plans sold. There were 6,049 new plans taken out during the three-month period, up 12% from the second quarter and the first time that the quarterly sales total has exceeded 6,000 since Q4 2008. Overall, the volume of new plans during the period was up 9% year-on-year, which once again marks the biggest year-on-year increase so far in 2015.
And if more evidence was needed to show just how much demand was increasing, the figures also revealed that the equity release lending total for the first nine months of the year (£1.16bn) has already exceeded 2013's annual total of £1.07bn, and is within £220m of last year's record lending total of £1.38bn – which it's definitely on track to beat.
"Appetite among over-55 homeowners for tapping into their housing wealth continues to grow," said Nigel Waterson, chairman of the Equity Release Council. "There is increasing awareness that equity release can offer many benefits in later life by providing people with extra income or the means to meet other costs and expenses.
"New arrivals in the sector and additions to the product range are helping more people to find options that suit their needs and circumstances, [and] the sector will continue to innovate."
The burgeoning popularity of equity release suggests that it must be doing something right, so is it time to get in on the action? If you're a homeowner aged 55+ and have built up a decent amount of equity in your home – or even better, if you own your home outright – it could be something worth considering.
It could allow you to free up some valuable cash without needing to downsize, and that money could be put towards anything from home improvements and paying off debt to supplementing your retirement income. The desire for regular income could explain the growth in drawdown plans – lending via this form of mortgage reached a new high in the three-month period, rising by 18% year-on-year to stand at £266.8m. These products allow customers to take regular instalment from their housing wealth rather than a lump sum, which for many, could be the ideal method.
That's not to say that lump sum equity release plans have fallen out of fashion, however. Sales of these plans have also risen by 18% on an annual basis with the value of products sold standing at £183.5m, the highest figure seen since the end of 2006, with many choosing this form of lending to cover a one-off cost (such as clearing their outstanding mortgage).
Whatever you need the money for, it's clear that equity release could be an option, but it won't be for everyone. It's effectively a lifetime mortgage and anything you own will need to be repaid on your death or the sale of the property, and it could affect the amount of inheritance you leave to your loved ones. Nonetheless, its popularity is clear, so if you want to find out more, consult our no obligation equity release service to see if it could be worth considering.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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