Equity release reaches new high in second quarter

Hannah Godfrey writes

The equity release sector saw a record-breaking second quarter this year, with the number of new customers and total lending value both up significantly year-on-year, the latest Equity Release Council figures show.

Between April and June 2017, over-55s withdrew a total of £701m from their homes – the highest figure in any single three-month period since the council began recording quarterly activity in 2002. It represents a 36% increase compared with the same period last year.

Second-quarter lending activity has now risen 82% in the last two years – up from £384m in the corresponding period in 2015. The latest quartely figure also equates to almost 90% of all equity release activity recorded during the whole of 2011, when £789m was released from homes.

There were 16,000 equity release customers between April and June this year. Of those, more than half (8,454), took out new equity release plans, up 27% on new plans recorded during the second quarter of 2016.

According to the Equity Release Council, housing wealth has become steadily more established as an option for retirement planning since the financial crisis.

Chairman Nigel Waterson said retirement income pressures facing savers in the era of defined contribution pensions and low interest rates were encouraging homeowners to consider a wide range of financial options.

“Housing wealth – often people’s most valuable asset – is an important part of bridging the gap between the comfortable retirement people want and the retirement they can afford from their savings,” he added.

Key Retirement technical director Dean Mirfin said: “The equity release market is on course to pass £3bn this year and the continued strong growth in the sector shows that, at pace, it is becoming an ever-increasing element of retirement planning.

“The amounts of property wealth being released means customers can afford to help themselves and families while also sorting out issues such as interest-only mortgage repayments and debts.”

Until now, last year’s third quarter had been the biggest on record for equity release, with lending at a then-high of £571.6m – 26% up on the same period the previous year.