Average equity release loans taken out by customers slipped in value by nearly £2,000 to £76,064 in the first half of 2019, when compared to H1 2018, suggesting that the market has stabilised in the face of economic and political uncertainty, according equity release adviser Key.

In its H1 2019 Market Monitor, Key revealed a year-on-year (YOY) increase of 5.6 per cent in the number of equity release plans to 22,126, while total value released edged up 3 per cent to £1.682bn.

The data suggested that, despite older homeowners releasing nearly £9.3m in property wealth per day in the first half of the year, the sector is reacting to current economic conditions witnessed across the entire property market – slow growth.

Furthermore, once potential advances of £706m are taken into consideration, the findings revealed a H1 total borrowing value of £2.38bn. According to Key, this is a result of new funders entering the market and historically low interest rates.

Commenting on the findings, Key CEO Will Hale said: “Against the backdrop of economic uncertainty, the equity release market has seen a subdued first half with slower growth than in recent years. While the key market drivers of low pension saving and substantial property wealth remain, the over-55s are taking a cautious approach to accessing the value tied up in bricks and mortar at the moment but, as confidence returns, we do expect the market to pick up.

“That said, the market is benefiting from the arrival of new sources of funding which is helping to keep rates at historic lows and to drive the launch of various new products. Consequently, we have seen an increase in the number of customers remortgaging to benefit from lower rates or the opportunity to release additional equity due to house price rises or the higher LTVs that are now available.”

Key’s Market Monitor, which analyses data reflecting both Equity Release Council members and non-members, found the biggest increase in value released was in Northern Ireland, where total value rose by 26 per cent with Wales seeing gains of nearly 23 per cent. Regions which recorded slight falls in total value released such as East Anglia, London and the South East all saw an increase in plan sales. Only the East Midlands saw a marginal drop in value released and plan sales.

Wales saw the biggest rise in plan sales at 23 per cent with the West Midlands recording an increase of more than 20 per cent. Other areas seeing double digit sales increases included Northern Ireland, the North West, the North East and Yorkshire & The Humber.

In addition to this, drawdown plans remained the biggest sellers, accounting for nearly three-quarters of all sales (73 per cent), with enhanced drawdown which offers better terms for people with health or lifestyle conditions accounting for 22 per cent. Lump sum lifetime mortgages made up 27 per cent of sales, including 10 per cent of enhanced plans.

Also commenting, more 2 life corporate marketing director Stuart Wilson said: "While the challenging economic and political climate has made its impact on the equity release market, Key’s H1 2019 Market Monitor suggests that we are still above the figures recorded in 2018. The analysis of the customer profile highlights that up to half of customers are making particularly prudent use of their housing equity and using it to repay unsecured debt or mortgages.

"This is particularly important as our own research - undertaken in conjunction with the Centre for Economics and Business Research - suggested that 29 per cent of over-55s are using debt to simply make ends meet so it must be a real relief to be able to clear this.

“Key also reported an increase in remortgaging of equity release plans which is likely to be spurred on by the fact that rates are now as low as 3.20 per cent fixed for life as well as the wide range of features – like the ability to repay interest – which just weren’t around five years ago."

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