£1bn in property wealth released from homes in Q1 – Key

Rising house prices have helped older homeowners to release more than £1bn in property wealth during the first three months of the year, new data from Key has revealed.

The equity release adviser highlighted that the figure is equivalent to more than £11.3m a day.

New figures showed the that the average customer received £103,710 – a 25% increase compared to the £83,242 released in the first quarter of 2020 – which demonstrated how over-55s are using housing equity to ease the pressure on income by managing debt.

Total equity released, including drawdown and further advances, in the three months to 31 March increased by 12.8% to £1.07bn, which was up from £950.59m in the same period last year – despite plan sales falling by 9.5%, from 11,423 to 10,341.  

Key suggested that increased house prices, which have climbed 5.7% year-on-year, played a role in boosting the amount of equity released, as the average LTV only rose 2% on an annual basis – from 25% in Q1 2020 to 27% in Q1 2021.

Furthermore, the data showed that the average price of a house used for equity release also jumped 12% to £366,660, up from £326,486 last year, and were substantially higher than the national average house price of £232,134 in March.

Key CEO, Will Hale, commented: “The strength of the property market driven by the extension of the stamp duty holiday and the launch of government guarantees for over 95% LTV mortgages is helping to increase the property wealth that over-55s can use for retirement planning.

“However, the equity release market is building its own momentum and demonstrating continued resilience as client look to it for support with debt management and gifting.

“The average amount released at more than £103,710 demonstrates how important property wealth is in meeting customers’ wants and needs while the rise in the average value of homes owned by customers’ shows how wealthier customers are looking to use their homes.

“Lower interest rates and greater flexibility driven by lenders focus on product development is adding to the momentum as the sector continues the journey to become a true later life lending market built on the foundations of specialist advice.”

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