Equity release lending hit £572m in the third quarter of this year – the highest quarterly value on record – according to figures from the Equity Release Council (ERC).
The figure, which is up 26% on the same period last year, took total equity release lending in the first nine months of 2016 to £1.48bn and led commentators to speculate the market could hit £2bn by the end of the year.
ERC chairman Nigel Waterson (pictured) said the fall in equity release interest rates to well below any other mortgage product in the first half of the year had made the idea more appealing to homeowners. Waterson attributed the fall in rates to increased competition within the equity release market.
He added: “The range of features now available gives people the option to choose inheritance protection, downsizing protection, monthly interest repayments or voluntary capital repayments when they opt for a lifetime mortgage.
“At the same time, customers automatically receive three layers of protection encompassing regulated financial advice, clear product standards and independent face-to-face legal guidance.”
Bower Retirement chief corporate officer Andrea Rozario highlighted the opportunities for advisers in this growing market, adding: “The opportunities for advisers to build a rewarding career in equity release are clear as customers need expert independent advice if they are to continue to benefit from the increased choice available.”
‘No typical customer’
Just Retirement group communications director Stephen Lowe suggested the range and competition in the equity release market means consumers are using the lending for more diverse purposes. “There’s no such thing as a ‘typical’ equity release customer because they each have their own circumstances and motivations,” he said.
Key Retirement technical director Dean Mirfin, who had previously called the rising equity release trend “no flash in the pan”, said: “The market is going from strength to strength and is firmly established as a major part of the retirement planning sector.” He also suggested the market should break through the £2bn mark this year “with ease”.
Responsible Equity Release managing director Steve Wilkie suggested that, in the current low interest rate environment, equity release could provide “a retirement income lifeline” and that the ERC figures were “cast-iron proof” of the market’s health.
He added: “Equity release has moved away from being seen simply as a product to redo the family house, or fund a round-the world holiday. It is now providing a viable financial solution to pay off the mortgage, distribute an inheritance when it is most needed or boost retirement income.”