The equity release sector is booming at the moment. Not only have our own figures shown that the number of lifetime mortgages available is on the rise, but latest research from the Equity Release Council shows clear growth in lending in the second half of 2015, highlighting the growing popularity of this form of finance.
The figures show a 26% rise in the value of equity release lending from the first to the second half of 2015, with £898m being lent during the second six-month period – up from £710m in the first. Not only is this strong growth in its own right, but it also marks the strongest half-year growth rate seen since the financial crisis: the previous record for the post-2008 era was set in 2013, when lending grew by 24%.
The trend was mirrored in the volume of new plans, the report noted, with the number of people taking out equity release products rising by 21% between the first and second half of the year. This marks another post-crisis high, and shows how popular equity release is becoming, with a growing number of people choosing to release equity in their home via lifetime mortgages rather than downsizing.
The figures also revealed that equity release customers withdrew more than 100 weeks' worth of full-time pay from their homes during the six-month period, with the average initial amount of housing wealth unlocked via drawdown mortgages standing at £49,607 – the equivalent of 109 weeks' pay.
Furthermore, the average lump sum mortgage withdrawal was £81,324, more than the average full-time worker takes home in three years (179 weeks) – and this kind of cash injection can prove to be incredibly beneficial.
"Equity release products continue to prove versatile in helping customers meet a range of financial needs before, at and during retirement," commented Nigel Waterson of the Equity Release Council. "As a result, there is growing recognition from UK consumers, regulators and politicians that housing wealth can – and should – play a greater role in financial planning for retirement."
He added that greater choice from new and existing providers "is driving the appeal of equity release, with product features emerging that allow more freedom to make capital repayments and pay interest on some loans".
Our own figures highlight this very point, with the data showing that five providers now offer the flexibility to make capital repayments compared with just one provider two years ago, giving customers the chance to repay some of their debt and ideally leave a bit more inheritance for their loved ones.
We expect this trend to continue, as does Nigel Waterson, "and the challenge for industry and regulators is to ensure product innovation is combined with consumer protection and long-term sustainability", he said.
Find out more about equity release and whether it could work for you
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.