Lending across the equity release market totalled £4.8bn in 2021, representing a 24% climb from 2020, new figures published by the Equity Release Council have revealed.

The total included £4.3bn via new plans and £500m to returning customers.

Across the whole of 2021, a total of 76,154 customers either took out new equity release plans, made use of drawdown reserves or agreed extensions to existing plans. This tally was a 4% annual increase from 72,988, although it remains below the peak of 85,497 recorded in 2019.

During Q4, the number of new and returning equity release customers served by the sector hit 19,975, which was a figure up from 19,300 in Q3 2021, and up from 19,333 in Q4 2020.

Customers borrowed £1.34bn of property wealth via equity release products in the final quarter of the year, including £1.2bn via new plans and £153m via drawdowns or further advances. This makes Q4 2021 the busiest on record for lending activity, surpassing the £1.17bn recorded in Q2.

The Council suggested that its figures show the sector has not only maintained its resilience throughout the uncertainty of the pandemic but has now returned to growth for the first time since 2018.

“Having proved itself to have solid foundations through a period of uncertainty, the equity release market’s return to growth has just as much to do with trust and innovation as it does with external factors as households look to manage their finances in later life,” commented Chairman of the Equity Release Council, David Burrowes.

“Equity release products have continued to evolve in recent years with new providers and features adding to their appeal. Increasingly, flexibility has brought lifetime mortgages closer to their residential equivalents, by offering capital or interest payment options alongside long-term, time-honoured protections against rising interest rates and negative equity.”

The Council’s figures also revealed that total lending to over-55s via lifetime mortgages and home reversion plans grew by 24% year-on-year, compared with 31% lending growth across the wider mortgage market.

Around three in five new customers (61%) opted for drawdown lifetime mortgages in Q4, which was the highest percentage of the year and up from 59% in Q4 2020.

more2life corporate marketing director, Stuart Wilson, added: “While rising pressure on older homeowners in the form of higher costs of living and greater job insecurity has certainly impacted over-55s desire to improve their finances by using housing equity, an emerging customer base is also turning to these loans to provide valuable financial options.

“Not only have we seen wealthier homeowners looking to include property wealth in their retirement planning but also an uptick in the number of people remortgaging existing plans to benefit from lower rates and product flexibilities.

“Against this complex backdrop, advice remains vital, and advisers must continue their work in educating borrowers on the range of options available and in assessing client vulnerability.”

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