Equity release market is on the rise

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.

David Burrowes, Chairman of the Equity Release Council, which promotes using property wealth to top-up pensions and provide a living inheritance to children and grandchildren, said cost of living pressures were among the factors driving the growth: “Increasing loan sizes partly reflect the rise in house prices and a more affluent type of customer using lifetime mortgages to plan their finances or gift a living legacy to family members.

“Having proved itself to have solid foundations through a period of uncertainty, the equity release market’s return to growth has just as much to do with trust and innovation as it does with external factors as households look to manage their finances in later life.

“Equity release products have continued to evolve in recent years with new providers and features adding to their appeal. Increasingly flexibility has brought lifetime mortgages closer to their residential equivalents, by offering capital or interest payment options alongside long-term, time-honoured protections against rising interest rates and negative equity,” he added.

Equity release is a way to unlock cash trapped in your property tax-free while remaining in your own home. It is for property owners aged at least 55, and the most popular form of equity release is a lifetime mortgage. You need to own a property in the UK to be eligible. It needs careful planning and customers are urged to take financial advice.

Simon Gray, managing director at equity release advisory firm HUB Financial Solutions, said: “Many people, especially those whose plans have been knocked off course over the last couple of years or who fear a cost of living squeeze, may still have the same goals and be open-minded to ideas they may not have considered before.

“High quality advice remains the key. It is crucial to help people navigate the options and find the best plan to meet their individual circumstances and needs, whether their goal is bolstering their income, estate planning, providing cash lump sums, or paying for care.”

Find out more by reading our guide to equity release.