Average rates for equity release dropped to a record low of 4.48% in the second half of 2019 while two out of every five products had rates lower than 4%, the Equity Release Council (ERC) Spring Market Report has revealed.

The report also suggested that 49% of property wealth was accessed in the final quarter of 2019, for every £1 of flexible pension payments taken.

The total sales of all mortgage products to customers aged 56 and over increased by 25,212 between the first half of 2015 and the first half of 2019, and the ERC suggested the rising numbers of consumers were accessing wider options in the residential as well as lifetime mortgage markets to meet their later life needs.


The ERC’s findings indicated consumer appetite for lifetime mortgages had “remained robust” in an uncertain climate in 2019, and comparing activity within the mortgage market, the lifetime mortgage segment had been the “fastest growing” of recent times.

While the number of new lifetime mortgages agreed in 2019 was 3% lower than in 2018, the reported indicated this area of activity had fared better against the uncertain economic backdrop than the first-time buyer, remortgage and homemover markets – which saw activity reduce by between 5% and 7% year-on-year.


ERC chairman, David Burrowes, suggested the hopes that the UK would leave behind the political and economic uncertainty of 2019 had been “rapidly overtaken” in recent weeks by the national and global response to the coronavirus outbreak.

“Reflecting on 2019, the equity release market remained robust, as for a second year running older homeowners unlocked nearly £4bn of property wealth,” Burrowes commented. “While uncertainty becomes the norm, property wealth will inevitably continue to play a role over the months and years to come, to help meet the wide-ranging needs of the UK’s ageing population.

“The increasing diversity of firms in the market reflects the wide range of consumer needs which property wealth is helping to address. It is also a sign of the greater frequency with which the option of releasing equity is coming up in retirement planning conversations.”

The ERC's findings also revealed the number of product options surpassed 300, with choice increasing by 42% in the last year, as strong competition combined with consumer demand fostered a “continued growth of product options”, the ERC report said. This figure has almost quadrupled in just two years, from only 86 in January 2018.

more2life CEO, Dave Harris, commented: “With more customers concerned about their later life finances than ever, it remains vital to seek specialist financial advice. Products have changed and evolved to allow them to remain available during the current crisis and customers need help deciding how and when they should access their housing equity.

“As the crisis progresses, lenders and trade bodies will need to continue working together to ensure that advisers are well-equipped with the necessary tools to support over-55s – particularly as the industry continues to work remotely.”

Just Group director, Stephen Lowe, added: “It’s unsurprising to see more people in later life using some of their housing assets to improve their later life or the lives of their families. After all, people aged 55 and above own housing wealth worth over £3.2trn.
 
“Our priority today is to ensure families can maintain access to their money during the pandemic. We have rapidly changed the way we deliver services to advisers and their clients to ensure our doors remain fully open for business.
 
“Families can feel confident that Just and other participants across the industry are being agile to keep services open.”

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