It's been another record year for the equity release market, as 2017 saw business boom, resulting in £3 billion of property wealth being released. This translates to an average of £77,380 per person, which retired homeowners used to improve their standard of living, Key Retirement's Equity Release Market Monitor shows.
The value of property wealth released saw record growth of 40% compared with 2016, and even managed to more than double in size from 2014. With over £8.2 million paid out to pensioners every day last year, it's clearly becoming an increasingly important part of retirement planning.
Equity release was particularly popular in the South East of England, which accounts for 27% of all plan sales and nearly a third of the property wealth released during the year. As expected, Londoners cashed in the most, at an average of £133,700, while those in Scotland took out the least (£49,000). Rather remarkably, all regions of the UK saw growth.
"Expansion in the market is being driven by customer demand as retired homeowners' confidence in making full use of their property wealth continues to grow," explained Dean Mirfin, chief product officer at Key Retirement.
"More lenders are launching in the market in response to demand and that in turn is increasing competition, driving down rates and bringing new innovative features to the market. Expert advisers increasingly recognise how property wealth makes a major difference for retirement income."
The figures show that 38,955 homeowners made use of equity release in 2017, up by 41% from 27,666 in 2016. While 64% of these homeowners reinvested their money into their houses through home and garden improvements, 33% used the extra cash to go on more holidays, and 24% used it to help family or friends.
Other popular uses included clearing debts, with 22% using the money released from the equity in their house to pay off their mortgage, while 31% used it to clear credit card and loan debts. This shows that equity release is not only getting more popular, but also that it can be used in a variety of ways to make retirement that much easier.
Additional data shows that people are more likely to use equity release as a long-term boost to their retirement budget, with 62% of all sales being for drawdown plans, which allow retirees to withdraw smaller amounts from their home as and when they need it. This is compared with the 38% of homeowners who took out a lump sum lifetime mortgage. Of course, which one is more suitable depends on personal circumstances and what your plans are.
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.