A record first half of 2022 has put the equity release market on course to hit £6bn in new lending for the year, new data published by Key Later Life Finance has revealed.

This comes as H1 saw the average customer release just over £100,000 in property wealth from their home.

Plan sales grew by 24.5% in the first six months of the year to 25,448 compared with last year while the value of new equity released climbed by 31.7% to £2.56bn – a record high for new lending and plan sales in a half year.

Key’s figures show that the average amount released in the first six months hit £100,468, a figure more than £5,000 higher than in 2021, as increased flexibility and house price rises attracted new customers with average interest rates at 3.65%.

According to the equity release adviser’s analysis, these are lower than those recorded three-years ago (3.92%) – despite five Bank of England base rate increases in recent months. The previous two years saw average interest rates at 3.19% in H1 2020 and 3.02% in H1 2021 respectively.

“As an industry, the first half of the year has seen the market return to growth as we work to develop and grow to better serve over-55s homeowners,” said Key CEO, Will Hale.

“With the cost of living crisis very much at the forefront of people’s minds, we’ve seen a continue focus on the management of both secured and unsecured debt – although the proportion of people who include some discretionary spending has increased.

“As is to be expected from a maturing market, we are seeing more people choosing to remortgage products and are delighted to be in a position to provide a better understanding to customers.”

Key’s figures also revealed that customers used drawdown products during the six months to reserve £876m worth of housing equity for use – a 32% increase from £666m in H1 2021. The average drawdown customer reserved £52,363, compared with £45,746 last year, and took an initial advance of £58,115.  

However, customers who took advantage of their drawdown facilities during the last six months took out on average £11,406, which is lower than the £13,765 last year.

“While pandemic and the cost of living crisis has affected all age groups, it is particularly critical in this market that we understand our customers’ needs and recognise their vulnerabilities,” Hale added.

“You can only take out equity release with the support of a specialist broker as well as independent legal advice and choosing to start that conversation will help people to find the right option for their individual circumstances now and in the future.”

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