For the first time, more than £1 billion has been unlocked through equity release in a single quarter. This is according to the latest statistics from the Equity Release Council, which found that a total of £1.02 billion was released in the third quarter of 2018.
This marks an increase of 24% compared to a year earlier, with £824 million of property wealth unlocked in quarter three of 2017. The number of new customers has also increased, with 12,016 new plans agreed between July and September 2018, up 6% from the second quarter.
Given this increased activity, the Council estimated that £11 million was released every day from the homes of 55-plus property owners. However, the amounts that these homeowners are unlocking remain modest, as the average new lump sum lifetime mortgage amount was even 5% lower than in the previous quarter – decreasing from £95,991 to £91,398. At the same time, the average first instalment from a drawdown plan saw a slight rise of 3%, from £63,584 to £65,343.
Drawdown products remained the most popular choice among new customers, as 63% chose this type of plan in the quarter, compared to 37% who picked lump sum products and less than 1% who picked a new home reversion plan. Returning customers, meanwhile, broke yet another record, with £99 million in drawdown being the largest quarterly amount on record. This is despite the average drawdown being marginally lower quarter-on-quarter, down from £11,543 to £11,443.
"The equity release market is making an increasingly important contribution to the later life landscape on an individual, social and economic level," commented David Burrowes, chairperson of the Equity Release Council. "Older homeowners are discovering in growing numbers that property wealth can play a key role in funding a myriad of needs, from making home improvements and adaptations to paying for social care and giving financial help to younger family.
"As the range of later life products continues to grow, it is vital we encourage customers to consider all available options, and ensure they can access appropriate guidance and specialist advice to weigh up the benefits, costs, flexibilities and protections to best meet their current and future needs."
Due to the complexity of equity release and the potential implications on inheritance, anyone considering taking the leap – to increase their retirement funds, pay for renovations or holiday, or to help their family for instance – would do well to discuss this with both a professional and their loved ones. While equity release can help a lot of people, it won't be right for everyone, and without the right advice you may end up with the wrong product for your needs and circumstances.
If you're not sure, our page on equity release contains more information as well as answers to some of the most frequently asked questions.
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.