Equity release lending more than doubles in two years reaching £870m in 2018

Written by Oliver Wade

Homeowners aged 55+ released £870m from the value of their homes between January and March 2018; an increase of 120% from the £394m seen in Q1 2016, according to the latest quarterly lending figures from the Equity Release Council (the council).

The data revealed a similar trend in the number of new customers, which has almost doubled during the same period, rising from 5,175 to 10,195, a 97% growth.

The trend illustrates how equity release has become a more widespread financial option among those aged 55 and over as a way to use their property assets to help meet their financial needs. As a result of the increased activity, older homeowners have unlocked £9.7m of housing wealth daily between January and March 2018, up from £4.3m per day in Q1 2016.

In order to meet the increased demand, the number of different equity release products has also risen, increasing from 69 in January 2017 to 86 in January 2018, according to the council’s Spring 2018 Market Report.

Equity Release Council chairman David Burrowes commented: “It is clear that equity release has become an increasingly useful and flexible financial planning tool for older homeowners. While pensioners’ income is on the rise, a potential over-reliance on private pensions could lead to a retirement income shortfall in the future. New sources of income in later life are increasingly being sought, and this highlights the need for a rounded approach to retirement planning which considers all wealth, assets and product choices.

“Equity release provides financial help for consumers in a wide range of circumstances, including some looking to pay off interest-only mortgages and others wanting to make home improvements or adaptations and fund social care needs in the comfort of their own homes. It can also help financial issues across generations. Recent data showed the generational gap in homeownership is continuing to grow with 30-32-year-olds having a third of the property wealth that the same age group did ten years ago.

“Given that nearly 70% of all homeowner equity belongs to households aged 55 and over, it is inevitable that housing wealth will need to be used to help get the next generation onto the housing ladder. Equity release provides a valuable mechanism to provide this as a ‘living inheritance’.

“With demand continuing to grow, equity release is providing solutions to a wide array of customer needs. As well as working closely with policy makers to inform decisions on social care funding and the single financial guidance body, The Council continues to focus its efforts on upholding the highest standards of consumer protection that underpin confidence in the growing later life lending arena.”

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