Equity release lenders have enjoyed a record year, with more than £3bn released via these home loans during 2017 – an increase of 42 per cent on the previous year.
According to figures from the Equity Release Council, the total amount of housing wealth unlocked by the over 55s reached £3.06bn in 2017. This is the first time this lending has exceeded £3bn in a single year.
In total, more than 67,000 customers sought to unlock part of their housing wealth in 2017. This included more than 37,000 new customers, taking out an equity release plan for the first time.
The Equity Release figures show the sector also enjoyed a record quarter during the last months of the year, with more than £838m lent to 10,327 customers. This is the first time the number of new equity release customers has exceed 10,000 in a single quarter.
This is 24 per cent higher than the 8,303 new customers that applied for equity release loans in the last three months of 2016.
These increases meant that there were 37,037 new equity release plans arranged in 2017, a 34 per cent increase on the previous year. This is the highest total on record and the biggest percentage increase since 2003.
The Equity Release Council said drawdown products remain the most popular product, giving homeowners aged 55 and over the option of releasing further funds at a later date, up to an agreed amount.
However the Council’s data shows that the number of returning drawdown customers dipping into these reserves decreased by 7 per cent in Q4, from 6,849 in Q3 to 6,360. At the same time the number of existing customers seeking further advances on existing loans also fell by 16 per cent.
Equity Release Council chairman David Burrowes described this as a “breakthough year” for the sector.
He says: “The record-breaking demand for equity release over the past year is testament to the fact more consumers are changing the way they plan financially for retirement, and are taking a broader range of options into consideration.
“This is illustrated by the continued popularity of drawdown products, with many customers viewing equity release as a reliable source of income in later life.”
He adds that more lenders in this market has increased product choice for consumers. This competition has also helped push interest rate to new lows.
Burrowes adds: “Property is for many people their largest asset and has the potential to play an ever-greater role in the future to meet the challenge of ensuring effective later life funding.”
Retirement Advantage Equity Release welcomed this announcement. Their head of marketing, Alice Watson adds: “Equity Release is flourishing, driven by a recognition that property has a critical role to play in boosting retirement income.
“If growth continues at this rate, we have a real chance of seeing the first billion-pound quarter in 2018.”
She adds: “We shouldn’t be surprised. For many people at or approaching retirement the amount of wealth they have in their property outweighs the amount they have in pensions or other savings. As taking a holistic view of all their assets becomes the norm, more people are considering how they can draw on property to help them live their retirement lifestyles they want.”