Equity release lending closes in on £1bn in record quarter

The equity release market moved closer to £1bn of activity in a single quarter as homeowners aged 55 and over unlocked £971m from their homes in Q2 2018, Hannah Godfrey finds.

The equity release market moved closer to £1bn of activity in a single quarter as homeowners aged 55 and over unlocked £971m from their homes in Q2 2018, according to figures from the Equity Release Council.

Total lending between April and June increased by 12% compared with the first quarter of 2018 (£870m) and by 39% year-on-year from Q2 2017 (£701m). The quarterly increase was broadly in line with the average 11% growth seen from quarter to quarter since the first three months of 2016.

The steady growth is a result of increased demand – the total number of customers served during Q2 rose by more than a quarter (27%) year-on-year, from 16,022 in Q2 2017, to 20,326, up 9% from Q1 2018 (18,586).

As a result, total lending in the first half of 2018 reached £1.84bn, up 32% on the first six months of 2017. During Q2, new customers took out plans, compared with 10,195 in the previous quarter.

The average amount of housing wealth unlocked by new customers fell slightly in Q2 compared with Q1 across both drawdown and lump-sum lifetime mortgages. The average first instalment of a drawdown plan decreased slightly from £64,797 to £63,584, while the average new lump sum plan dipped from £96,483 to £95,991.

‘£1bn a year to £1bn a quarter’

Equity Release Council chairman David Burrows said property wealth had an important role to play as part of the solution to many socio-economic issues – from boosting retirement incomes to funding social care and easing intergenerational pressures.

“Growing choice and flexibility have propelled equity release into the mainstream consciousness, and it is crucial consumers are encouraged to weigh up all the choices available to them, to help create a rounded approach to later-life planning that considers property alongside pensions and other assets,” he added.

More 2 life chief executive officer Dave Harris commented: “These figures are the latest indication of the impressive growth this sector has shown over the last few years as increasing numbers of older homeowners use equity in their homes to boost their finances.

“It is hugely impressive it has taken just five years for the industry to grow from lending £1bn a year to £1bn a quarter. If we continue at this rapid rate, we could be approaching an impressive £1bn a month in the next five years.”