Equity release borrowers took out £1.25bn in the first half of 2017, boosted by maturing interest-only loans, according to new figures from Key Retirement.
Key’s latest Equity Release Market Monitor says the number of customers choosing equity release to pay off mortgages rose faster than any other, from 17 per cent in 2010 to 23 per cent in H1 2017.
The £1.25bn figure rose 33 per cent from the previous half. New plans rose 44 per cent in the period, to 17,656, according to Key.
Key Retirement technical director Dean Mirfin says the firm expects to see a further H2 rise in consumers choosing equity release to pay off interest-only loans.
He says: “We think it’s definitely going to bring the average plan amount up in the second half of the year.”
Mirfin says the age brackets showing the most growth are 60-64 and 65-69, totalling 35 per cent of equity release borrowing in H1.
This is due to a growth in customers choosing equity release to pay off interest-only mortgages, according to Mirfin.
The Key research says: “In 2017 the equity release market is experiencing a continued influx of interest-only mortgage maturities, and it is these customers we remain most concerned about.
“Those with shortfalls or no repayment method in place have little or no time left to plan for their interest-only mortgage exit.”
The biggest age bracket using equity release was customers aged 70-74, with 31 per cent of this group choosing the option.
Older borrowers still prefer using equity release for home or garden improvements, with 64 per cent of all lending being used for this purpose.
Mirfin says: “It’s definitely a huge one, and really dominates the older age groups.”
The average loan size came down in the period, to £70,625 from £76,301. Mirfin says this reflects more people using equity release for lower cost activities.
Key Retirement expects to see equity release lending rise to £3bn by the end of 2017, up from £2.1bn last year.
The lender also predicts that the number of new plans will rise 45 per cent to 40,000 in 2017 when compared to 2016.
The Key Retirement data also incorporates figures from the Equity Release Council, which will be published soon.