The number of drawdown plans increased strongly in the third quarter of 2019 as the equity release market recorded its best quarter this year for volume and value of new business, according to new data from Key.

Key’s Equity Release Market Monitor showed that 11,772 plans, worth £886.59m, were taken out in Q3 2019 – with an additional £368.58m reserved for future use. The over-55s specialist adviser said the current economic and political turmoil has encouraged customers to be cautious.

Key announced the volume of plans taken out is 8% up quarter-on-quarter – 836 more from 10,936 – but 3% down year-on-year, which was down 361 from 12,133.

Key CEO, Will Hale, commented: “While the market is not seeing the double-digit growth of recent years, it continues to prosper and Q3 2019 has been the strongest quarter this year with people releasing over £887 million and reserving a further £369m.

“The growth in popularity of drawdown, the smaller amounts released and the increasing numbers of customers looking to remortgage, all points to borrowers who see the value of using their housing equity but want to do this as cautiously and responsibly as possible.

“Historically low rates and the wide range of products with innovative features mean that those who do want to help themselves or their families by accessing the value tied up in their home have a range of options.

“However, it also means that specialist later life advice is vital as making the wrong choice around whether to borrow, how much to borrow and how to borrow can have long term consequences.”

Across the country the biggest increase in value released was in Wales at 21%, followed by the West Midlands at 12%. Yorkshire & The Humber and London also saw increases, whereas the biggest drops in value released were in East Anglia, and in the South-West.

Wales also recorded the largest increase in plan sales at 18% followed by Yorkshire & The Humber on 14% and the West Midlands on 11% while London also saw gains. The biggest fall in plan sales was in the North-East.

more2life CEO, Dave Harris, added: “Today’s figures, which highlight the growing popularity of drawdown products, is excellent news for not only consumers but the wider equity release industry.

“Underfunded pension pots and longer retirements mean that growing numbers of people find themselves cash-poor but equity rich as they age. Later Life lending products are ideally suited to help make up any shortfall in income during retirement.

“As innovation and the advice capacity in the market increases, we will be in a position to help more retirees will enjoy better retirement outcomes.”

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