Around £1m was added to the value of the total UK housing stock every minute in 2021, according to a new report published by the Equity Release Council.

Last year saw the UK’s property wealth reach a record £5.2trn.

The Council’s Spring 2022 Market Report revealed that the average equity release customer drew the equivalent of more than seven years of retirement income from their home in 2021.

With UK property wealth reaching a new record by the end of last year, the equity release market saw customers withdraw an average £125,000 as a single lump sum or via incremental drawdowns. The Council’s analysis showed that this sum is equivalent to more than seven years of a single pensioner’s typical net income, and nearly four years for the typical pensioner couple.

Low interest rates by historic standards and increasing product flexibilities mean customers can access potentially life-changing sums with more ways of managing the overall cost of borrowing in later life.

The Council’s market report also revealed that product pricing crept up year-on-year from 3.95% in January 2021, to 4.16% in January 2022. However, more than 300 products are now available at rates of 4% or less, while the average customer secured a rate of 3.39% on their loan during H2 2021.

Chair of the Equity Release Council, David Burrowes, said: “After years of putting money away in bricks and mortar, older homeowners are turning the tables and taking funds from their homes in order to boost their retirement income, meet one-off costs and gift a living inheritance to family.

“With £1m added to the value of UK housing every minute last year, the options afforded by property wealth will feature in many people’s thoughts as they make financial plans for the future.

“The equity release market’s return to growth is part of a wider pick-up in later life lending activity, and the flexible design of modern lifetime mortgages gives customers more ways to manage their finances and access life-changing sums of money at a lower cost.”

The Council’s report also revealed that the second half of the year saw more products adding the option to make voluntary penalty free partial repayments – with 85% of products allowing this in January 2022 compared with 68% in July 2021.

As of last week, this feature has become a fifth “product standard” or prerequisite for all products recognised by the Council. It enables customers to reduce their loan sizes and borrowing costs where possible if their circumstances change, without committing them to regular repayments or risking repossession.

“While many aspects of today’s market have been transformed in the 30 years since consumer safeguards were first established, firm foundations remain in place so no customer need ever worry about owing more than their home is worth and can rest easy in the knowledge they can remain in their home for life with no threat of repossession for not keeping up with repayments,” added Burrowes.

“As we move into an environment of growing cost-of-living pressures, the importance of rigorous advice will be greater than ever so that decisions to release equity continue to provide long-term satisfaction as well as short-term relief.”

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