Moneyfacts.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfacts.co.uk will always be from firstname.lastname@example.org. Be Scamsmart.
Equity release continues to perform strongly, with the sector continually hitting new records as more and more people realise the value of accessing their property wealth in old age. New figures show just how much those people are benefiting, with an estimated £7 million in property wealth being paid out every single day!
That's according to figures from over-55s finance specialist Key Retirement, which sheds light on the popularity of this form of later life lending. The data shows that customers are, on average, releasing £73,610 of property wealth, with the typical house price for equity release rising to £322,400 in the first three months of the year – around 50% higher than the average UK house price of £217,502 (according to Land Registry data).
Overall, £633 million of property wealth was released in the first three months of 2017 – equating to some £7 million every day – compared with £414 million for the same period last year (up 53%). The number of equity release plans sold also jumped up, rising to 8,604 from 5,447 a year ago (up 58%), and that figure is expected to continue rising in the months ahead.
After all, interest-only borrowers are thought to be driving equity release business at the moment, with 22% of customers having used their property wealth to clear outstanding mortgage debt, and lump sum plans now accounting for 41% of the entire market. Given that an estimated 10,000 borrowers per year are set to come to the end of interest-only loans between now and 2020, it's highly likely that many of those borrowers could turn to equity release to clear their debt.
However, that isn't the only thing property wealth is used for. The figures went on to reveal that most of it is being used to fund home and garden improvements, with 62% of customers releasing money to enhance their homes, while 32% use the cash to fund holidays. A further 30% use it to clear credit card and loan debt, showing that it isn't only mortgages that some older borrowers are concerned about.
"The pace of growth in the equity release market is accelerating rapidly, and the year-on-year expansion this quarter underlines how property wealth is contributing to financial planning," said Dean Mirfin, technical director at Key Retirement.
"Equity release customers are able to tackle a wide range of issues, and the increasing popularity of lump sum plans underlines how record low rates for plans are providing vital support for retirement planning.
"With more than 1 in 5 releasing equity from their homes to repay mortgages as the first major wave of interest only mortgage maturities hits, it is certain that demand from people facing capital repayment deadlines will look to equity release as a solution. That makes it even more important for mortgage lenders to start engaging with equity release as a potential solution for their customers."
Find out more about equity release to see if it could be 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. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfacts.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.