Equity release sees double digit growth in all regions: ERC

The research shows that over the course of 2018, homeowners over-55 accessed 50p of housing wealth for every £1 of savings withdrawn through flexible pension payments.

As product options continue to expand, the lifetime mortgage market saw the biggest annual increase in new loans compared to other mortgage market segments for a third successive year.

Lifetime mortgages are now estimated to account for around a third of all mortgages taken out by homeowners from their mid-50s onwards, compared to less than a fifth ten years ago.

Between July and December 2018, 43,879 over-55 homeowners accessed money from the value of their homes, including 24,907 new plans agreed.

However, while total annual lending activity grew for a seventh consecutive year to reach £3.94bn in 2018, the average amounts of property wealth withdrawn remained broadly stable – indicating that growth is a result of broader uptake rather than increasing loan sizes.

Over the last five years, London and southern regions – East of England (158%), the South East (143%) and South West (99%) – have experienced some of the strongest growth in consumer demand.

More recently, the Midlands and Northern Ireland have come to the fore, with the East Midlands (26%), West Midlands (20%) and Northern Ireland (21%) seeing some of the greatest increase in demand for lifetime mortgages between 2016/17 and 2017/18.

The number of product options that meet Equity Release Council standards has also doubled to 221 between 2018 and 2019.

52% of product options now offer downsizing protection, up from 42% a year earlier. 25% of new plans taken out during the second half of 2018 allowed customers to make interest payments, 27% featured downsizing repayment options and 87% enabled customers to make voluntary partial repayments with no early repayment charge.

The second half of 2018 also saw the introduction of regular income lifetime mortgages, providing monthly payments to customers’ bank accounts in the style of pension products.

David Burrowes, chairman of the Equity Release Council commented: “2018 saw equity release enter the mainstream of financial services as an increasingly popular way to meet important and diverse social needs in later life. Flexible options to access housing wealth are helping the nation’s growing population of older homeowners to fund lifestyle purchases, satisfy daily needs, support long-term financial planning or assist their families.

“As the demand for equity release grows, so does the need for quality advice. It is vital that consumers have access to professional support that considers short and long-term needs, the broader retirement picture and the role of family in decision-making. Products recognised by the Council remain the only route which guarantees product safeguards, regulated and qualified financial advice and independent legal counsel to help identify whether they fit a customer’s later life needs.

“Equity release is not a ‘silver bullet’ for every retirement need, but a growing number of homeowners are finding it can be a solution to meet a range of financial goals.”

Mark Gregory, founder of Equity Release Supermarket, added: “Product innovation and competitive interest rates are central to the success of the lifetime mortgage market and it’s been pleasing to see lenders introduce more flexible features in 2018 and more recently reduce their interest rates.

"At Equity Release Supermarket, our business growth mirrors the Council’s report and we’re seeing strong regional growth where house prices are rising.

"Brexit fears are clearly impacting the market in the short term but we are forecasting strong growth in 2019 as lifetime mortgages increasingly become a mainstay of financial planning in later life.”