Figures for the first three months of 2018 show that equity release lending has more than doubled over the past two years, from £394 million in the first quarter of 2016 to £870 million this quarter. As a result, the Equity Release Council estimates that nearly £10 million in housing wealth was withdrawn per day.
At the same time, their data revealed that the number of new customers has almost doubled over the same period, from 5,175 in the first three months of 2016 to 10,195 this year. Clearly, equity release is becoming a popular choice among 55+ homeowners, with the current data suggesting that equity release could be on course to provide as much as £4 billion of retirement funding for older homeowners over the course of this year.
Part of this increased popularity could be explained by the increased options available. More and more products are offering appealing options, such as the possibility to make (partial) repayments – now offered by 70% of products – which could be convincing previously reluctant homeowners to take the leap.
"It is clear that equity release has become an increasingly useful and flexible financial planning tool for older homeowners," said David Burrowes, chairperson of the Equity Release Council. "While pensioners' income is on the rise, a potential over-reliance on private pensions could lead to a retirement income shortfall in the future. [This] highlights the need for a rounded approach to retirement planning which considers all wealth, assets and product choices."
One in three new customers opted for lump sum lifetime mortgages, which gave them all the money in one go, at an average of £96,483 across the quarter. The remaining two-thirds chose drawdown, whereby they received an average of £64,797 initially with £38,934 to be received at a later date.
"Equity release provides financial help for consumers in a wide range of circumstances, including some looking to pay off interest-only mortgages and others wanting to make home improvements or adaptations and fund social care needs in the comfort of their own homes," added David. "It can also help financial issues across generations, [as] a valuable mechanism for providing a 'living inheritance'."
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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 Any products featured may be withdrawn by their provider or changed at any time.