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Equity release market is on the rise

Peter Sargent

Sub Editor / Proof Reader
Published: 27/01/2022

The equity release market saw a return to growth in 2021. Record amounts of property wealth were accessed by customers, according to industry body the Equity Release Council, which says the market rose by 24.8% last year, to a total of £4.8 billion.

Annual lending to customers aged over 55 broke the previous record of £3.94 billion, which was set in 2018, as the fourth quarter of 2021 turned out to be the “busiest on record”. Between October and December, customers borrowed £1.3 billion. Average loan sizes increased as more than 76,000 new and returning customers took out products. These included lifetime mortgages and home reversion plans.

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Borrowers spoilt for choice as holiday let market explodes

Holidays in the UK have soared in popularity as the pandemic has hobbled travellers. Luckily, the number of holiday let loan products has trebled since 2020, making it easier than ever to tap in to this demand.

Analysis from Moneyfacts.co.uk shows that there are now 231 buy-to-let mortgages eligible for holiday lets, a 25% increase in the number of available deals available since September 2021. Looking further back, in August 2020 there were just 74 similar deals available.

There are more lenders entering this part of the market too, with 27 brands - mainly building societies - offering holiday let loans. This is an increase from 25 in September 2021 and 21 in April 2021.  

The average cost of fixed-rate mortgage deals available on holiday lets is also becoming more competitive. In January 2022 you would pay an average rate of 3.92%, down from 4.14% in September 2021.

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Mortgage lenders court landlords with raft of new deals

Lenders are backing the buy-to-let sector, with many more mortgage deals now available to landlords at higher loan-to-values, new research shows.

Moneyfacts.co.uk’s latest data reveals that the number of buy-to-let mortgage products has jumped by 222 month-on-month between December and January. This means there are now 3,528 mortgage deals for landlords to choose from, the highest number Moneyfacts has recorded since 2007. This also represents 945 more products than were available pre-pandemic.

Meanwhile there has been a sharp recovery in the number of products on offer to those borrowers with smaller deposits or levels of equity. This time last year, for example, there were no deals at all available in the 85% LTV bracket, but now there are 28 products available, the most since March 2020. As recently as November 2021, there were only four deals to choose from in this bracket.

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Rise of the buy-to-let company

A record number of buy-to-let companies were set up in 2021. Research published by residential estate agent and property services company Hamptons in its latest Monthly Lettings Index shows that a record 47,400 new buy-to-let companies were formed last year.

That’s a new total of 269,300 buy-to-let UK companies, many of which have set up since the withdrawal of mortgage interest relief for investors with properties in their personal names five years ago. This made it more profitable for some landlords to move buy-to-lets to a company. With half of all buy-to-let (BTL) mortgages taken up by companies, they hold nearly a third (583,000) of outstanding BTL mortgages.

Buying to rent can be an attractive option for many, particularly in areas where rents are rising. Hamptons says average monthly rents in southern England hit the plus-£1,000 mark for the first time at the end of 2021, as UK rents overall rose 7.2% year-on-year. Indeed, London and the South East are home to 45% of new BTL companies.

Despite this growth, 25,100 companies have closed since the pandemic began, according to Hamptons, more than 15,000 of them in 2021, and in some areas the number of companies is diminishing, such as the North East, where the number reduced by 6% last year.

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Moneyfacts Consumer Awards 2022 Reader Winners

This month, Ellie in our Events team had the enjoyable job of calling three of our readers to tell them they had won £1,000 each!

The three readers had all taken part in our Consumer Awards Survey, sharing their opinions on the financial services brands they use, which decide the winners of the Moneyfacts Consumer Awards 2022. This year, over 110,000 consumers (who voted) had their say on 140 brands!

Our first winner, who wished to remain anonymous, said “I never expected to win anything from doing the surveys, but they were so simple and easy to fill in - and often related to financial decisions I was either contemplating or had recently made - that it was a welcome diversion whenever they appeared”. He intends to use his winnings to pay his Christmas credit card bill to treat his wife and young daughter to a short break away or a special treat.

Gemma B, our second winner was delighted “This is the first time in my life I've had a genuine call saying I've won money, and the first time I've won more than £5 at anything! It was an amazing surprise because I'd completely forgotten about the survey. I was just beginning to plan how to budget for my daughters' upcoming school residential trips and now no scrimping and saving will be necessary - we feel tremendously lucky!”

Our final winner, who also wished to remain anonymous, plans to book a summer holiday somewhere hot!

The survey results will be unveiled at the Moneyfacts Consumer Awards, held on 31st March at the Royal Lancaster Hotel in London.

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Recent News

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Bank of England rate hike filters through to mortgage deals

10th January 2022

The Bank of England’s surprise December interest rate increase has begun to filter through to the mortgage market, pushing up the cost of both fixed and variable rate deals.

The Bank of England’s surprise December interest rate increase has begun to filter through to the mortgage market.

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Premium bonds jackpot for lucky Lancashire

5th January 2022

Lancashire is the lucky county when it comes to premium bonds millionaires. ERNIE’s home county saw its second jackpot winner in consecutive months, as 2022 began with two premium bonds winners from Lancashire and Hertfordshire – the 14th overall from each county.

Lancashire is the lucky county when it comes to premium bonds millionaires.

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Base rate rises to 0.25% - what does this mean for your finances?

16th December 2021

The Bank of England has raised base rate to 0.25% today, which will directly impact mortgage and savings interest rates

The Bank of England has raised base rate to 0.25% today, which will directly impact mortgage and savings interest rates

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Inflation rises to 10 year high

15th December 2021

Inflation increased to 5.1% during November, its highest level in over 10 years, which could put pressure on the Bank of England to raise base rate tomorrow

Inflation increased to 5.1% during November, its highest level in over 10 years, which could put pressure on the Bank of England to raise base rate tomorrow

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Most Popular Money News

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Borrowers spoilt for choice as holiday let market explodes

25th January 2022

Holidays in the UK have soared in popularity as the pandemic has hobbled travellers. Luckily, the number of holiday let loan products has trebled since 2020, making it easier than ever to tap in to this demand.

Holidays in the UK have soared in popularity as the pandemic has hobbled travellers.

Read More
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Mortgage lenders court landlords with raft of new deals

24th January 2022

Lenders are backing the buy-to-let sector, with many more mortgage deals now available to landlords at higher loan-to-values, new research shows.

Lenders are backing the buy-to-let sector, with many more mortgage deals now available to landlords at higher loan-to-values, new research shows.

Read More
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Rise of the buy-to-let company

20th January 2022

A record number of buy-to-let companies were set up in 2021. Research published by residential estate agent and property services company Hamptons in its latest Monthly Lettings Index shows that a record 47,400 new buy-to-let companies were formed last year.

A record number of buy-to-let companies were set up in 2021.

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Should you increase mortgage repayments or your pension contribution?

16th June 2021

Whether it is getting a pay rise or paying off ,a long-term debt, getting a little bit extra each month can be a great boost to personal finances

Whether it is getting a pay rise or paying off ,a long-term debt, getting a little bit extra each month can be a great boost to personal finances

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