Equity release lending will surpass £3bn in 2017 after breaking the £2bn barrier last year, Key Retirement has predicted.
There was £1.25bn of property wealth released in the first half of 2017, with plan sales soaring by 44% and the value released increasing by 33% from the first half of last year.
If lending reaches £3bn this year that would represent a 43% increase from £2.1bn in 2016.
Dean Mirfin, technical director of Key Retirement, said: “At the start of the year we were thinking roundabout £2.8-2.9bn in terms of total lending but we think that will comfortably top £3bn now.
“More property wealth was generated for pensioners in the first six months of this year than all of 2013, demonstrating how rapidly the market is expanding as record low rates drive more competition to the benefit of customers.”
The total number of plans sold is expected to rise from 27,666 last year to 40,000 this year.
Key Retirement research shows equity release is increasingly being used for debt and repayment – including paying off car finance.
It’s common for advances to be used for multiple things, such as helping a first-time buyer get a deposit as a secondary reason.
Typical advances are getting smaller – from £70,625 in H1 2016 to £76,301 so far this year – because more loans are being used for home improvements rather than on luxuries like going on holiday.
More single women (22%) are taking out equity release than men (11%), reflecting the fact that more wealth in the form of pensions is held by men.
We are currently in the first wave of interest-only maturities which runs until 2020 – there are 40,000 maturities a year of which Mirfin estimated around 10,000 have no repayment method.
Santander currently refers suitable borrowers to Key Retirement for advice.
Mirfin added: “Lenders need to do more.
“Most of the people that come to us to repay a mortgage find us on their own so they put two and two together and say we will repay the loan by doing equity release.
“A significant number are going to have a problem.
“What the FCA are doing is very important – they are looking at what lenders are doing for end of term borrowers.”