Equity release on course for record lending in 2021
The equity release market is on course for a record year, said Key.
The equity release adviser said that customers took out £1.049 billion in property wealth in the three months to the end of September, meaning the sector is on course to see £4bn in lending this year.
The average equity release borrower unlocked £101,593 in property wealth in the third quarter of 2021.
What do they spend it on?
Big ticket items, such as debt management and gifting, were behind nearly two-thirds of the equity released in the third quarter, said Key.
Nearly three quarters of the money released (73%) was used for debt management and to help family and friends. Around £588 million of the money released in the quarter was used to clear debts while more than two-fifths (42%) of the cash given to family and friends was used for house deposits while 36% was given as an early inheritance.
The average customer is 70 years old which is an increase from 2020 – with 49% of those who take out equity release being between the ages of 65 and 74 years old.
Will Hale, CEO at Key, said: “Against the backdrop of a pandemic, the equity release market is on track to break the £4 billion barrier and potentially even touch £4.5 billion by the end of the year. This performance demonstrates how modern equity release products are now embedded within the mainstream financial services market, offering low rates and flexible features to address a wide range of different customer needs and wants.
“This year we’ve seen increasing numbers of people using equity release to support families, manage their current borrowing and use the historically low rates to remortgage their existing equity release plans. Whilst many plans have been put on hold during the pandemic, we also expect to see the return of people looking to boost discretionary spending as they look again at how to fund their later life ambitions.
“Equity release and other later life lending products can offer a solution to many of the opportunities and challenges that people encounter as they approach and move through retirement However, it is vital that people consider all their options and get specialist advice to ensure they are making smart sustainable choices.”