Equity release lending fell at end of 2019
The total value of equity released by later life borrowers dropped by 4% on an annual basis in the last three months of the year, according to Key.
The equity release business said that there was £3.4 billion lent out as lifetime mortgages, compared to £3.4bn in the same period of 2018.
The number of new plans taken out also slipped by 3% from 47,081 to 45,598 last year.
Despite the year-on-year fall, the last three months of the year saw a pick-up in lending, with £921 million released compared with £887 million in the third quarter.
Homeowners released nearly £9.5 million of property wealth a day in 2019 but caution among consumers and the dominance of drawdown saw the average amount released slip marginally to £75,631 compared with £76,473 in 2018.
Reasons for equity release
Around 29% of equity release customers in 2019 used some or all of the cash to pay off loans or credit cards, said Key, while 20% used money to clear existing mortgages.
Around two out of three (64%) of customers used some or all of the cash they released to improve their homes or gardens in 2019.
Almost a third (32%) were able to fund holidays with some of the money they released and gifting to family continued to be an important motivation for equity release – 28% of customers helped out family from their property wealth in 2019.
Will Hale, CEO at Key, said: “Although we saw small year on year falls in the value and volume of equity release taken out, the last two quarters were more upbeat and we start the year with a positive headwind fuelling the belief that we will continue to see growth in the equity release market.
“There are more than 24 million over-55s in the UK so market drivers remain strong and as consumer confidence grows we will increasingly see more people looking to take advantage of the innovative new products and continued low rates.”