The value of equity release lending reached a record high of £571.6m in the third quarter of 2016, according to the Equity Release Council.
The sector grew by 26 per cent year-on-year, the figures found, with total annual lending for 2016 on course to break through the £2bn mark for the first time, having reached £1.48bn in the first nine months of the year.
From July to September 2016, 7,414 new equity release plans were taken out: an increase of 11 per cent from the previous quarter and up 23 per cent year-on-year. This is also the first time the number of new plans exceeded 7,000 since Q4 2008.
Overall, drawdown lifetime mortgages accounted for 62 per cent of new plans in Q3 – the smallest market share since Q4 2010. However, drawdown plans – which provide customers with the option to release housing wealth in a number of installments and can help meet smaller costs or boost retirement income over a period of time – remain the most popular category, with home reversions continuing to represent a small (>1 per cent) part of the market.
Equity Release Council chairman Nigel Waterson says: “Coming 25 years after the first industry Standards were introduced for equity release, these record lending figures further highlight the appeal of using housing wealth as part of the solution to funding later life.
“Product innovation has played a huge role in the growing appeal of equity release to a range of customers, including the growing number of homeowners with interest-only mortgages due for repayment.”
Age Partnership’s Simon Chalk says: “Housing wealth continues to play a crucial role in retirement planning with trillions tied up in over-55s’ properties. This is set to carry on in an upwards trajectory in the coming years, even if house price growth is at a modest rate whilst Britain redefines its relationship with Europe.
“With the Government’s increased focus on our ageing population and their future, it has allowed the equity release market and wider retirement industry to be more inventive in finding suitable solutions for individuals in shaping their finances for the future.”