The number of lifetime mortgages sold to homeowners saw a 29% rise in March compared to the same month in 2021, Freedom of Information (FOI) data collected by Quilter has revealed.

According to the data from the FCA, 5,052 lifetime mortgages were sold across all LTV bands during March, after the same month in 2021 reached a total of 3,930.

Quilter also highlighted that the average number of lifetime mortgages was 31% higher than the average in 2020, as well as 21% higher than 2021. However, the 2022 average is only based on three months of data.

A lifetime mortgage is a type of equity release, a loan secured against a property that allows a homeowner to release tax-free cash without needing to move out. Lifetime mortgages are available to homeowners aged 55 or over and the money can be taken as a lump sum or as series of lump sums.

The FOI analysed by Quilter also revealed that the most popular LTV band for lifetime mortgages is in the 10 to 20% area, with an average of 988 mortgages sold per month since 2020. Comparatively, an average 53 lifetime mortgages in the 50 to 60% LTV band have been sold each month since 2020.

Mortgage expert at Quilter, Karen Noye, said the figures show that equity release is “soaring in popularity”.

“While there is a place in the market for these types of products, it's essential that people use them for the right reasons,” Noye commented. “The cost of living crisis is biting, and it is worrying to think that people are ripping equity out of their homes just to pay their monthly bills.

“One of the benefits of equity release is that if you don’t want to leave your home then this product can allow you to release capital but still live in your property.

“However, lifetime mortgages do carry a significant risk that you may end up owing far more than you borrowed when the home comes to being sold. This is because this type of mortgage charges compound interest and if you don’t keep up with regular payments then the entire sum will compound. Therefore, you should be cautious when working out whether this product is right and make sure you seek professional advice to decide if it’s the right choice.”

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