New equity release borrowing hits record high in Q3: ERC

Homeowners aged 55+ took out a record 13,452 new equity release plans in Q3, a quarterly rise of 8% and an annual rise of 34%, the latest figures from the Equity Release Council show.

With 9,648 returning customers and 2,419 further advances agreed, the market saw 25,519 customers active during Q3 with total lending topping £1.71bn, another record figure.

Total lending to new and returning customers is now up 49% year-on-year.

However, activity reduced by 10% in the final month of Q3 as September saw challenging economic conditions and product prices rise.

Product preferences amongst new customers were split almost equally during Q3, with 52% of customers opting for lump sum lifetime mortgages while 48% chose drawdown lifetime mortgages with some of their loan set aside for future use.

David Burrowes, chair of the Equity Release Council, commented: “The summer months have seen the equity release market resume its pre-pandemic growth trajectory, with extra protections having been added in the intervening years so all new customers can make voluntary repayments when they can afford to and reduce their overall costs. Equity release is not an overnight purchase, and the desire to secure lower interest rates before anticipated rises is likely to have influenced customers’ timings as they completed deals from earlier in the year.

“While recent turbulence in financial markets have added to upward pressure on interest rates, product flexibilities and stringent safeguards mean modern equity release remains the most secure and adaptable way to access the money tied up in your home without giving up ownership or risking repossession through fixed repayment commitments.

“With the value of UK homes having passed £7 trillion, people are increasingly inclined to put their property wealth to work in later life to support themselves and family in the here-and-now.

“Council standards mean there are measures in place to protect customers’ existing loans from rising interest rates, as well as ensuring that people can only take out equity release once they have considered it from every angle through detailed financial and legal advice.”