Equity release lending rises by 25%
The total value of equity release lending grew by more than a quarter (26%) year-on-year to a new record high of £571.6m in the third quarter of 2016, according to the latest figures from the Equity Release Council.
Lending for 2016 is now on course to break through the £2bn mark for the first time, having reached £1.48bn in the first nine months of the year: just £128m short of 2015’s full year total (£1.61bn).
From July to September 2016, 7,414 new equity release plans were taken out: an increase of 11% from the previous quarter and up 23% year-on-year.
Nigel Waterson, Chairman of the Equity Release Council said that the record lending figures further highlight the appeal of using housing wealth as part of the solution to funding later life.
“Product innovation has played a huge role in the growing appeal of equity release to a range of customers, including the growing number of homeowners with interest-only mortgages due for repayment,” he explained. “The range of features available now give people the option to choose inheritance protection, downsizing protection, monthly interest repayments or voluntary capital repayments when they opt for a lifetime mortgage.
“Increased competition and new entrants to the market have helped to lower the costs of equity release dramatically in recent years, making it even more attractive to customers. Indeed, average equity release interest rates fell further than any other category of mortgage product during the first half of 2016 with independent research showing customers have never been better served in terms of products and rates.”
Steve Wilkie, managing director of Responsible Equity Release, added: “With interest rates on savings accounts in the gutter, drawdown lifetime mortgages continue to provide a vital retirement income lifeline. They are filling the savings void and enabling pensioners to keep pension savings invested rather than drawing down at a time when stock market volatility is eroding pension values.
“These figures provide cast iron proof that the equity release market couldn’t be in better health.”