Homeowners over the age of 55 unlocked a record amount of housing wealth via drawdown lifetime mortgages in the final quarter of 2015.
Homeowners over the age of 55 unlocked a record amount of housing wealth via drawdown lifetime mortgages in the final quarter of 2015.
The latest figures from the Equity Release Council revealed annual equity release lending hit a new high of £1.61bn.
Lending via drawdown products totalled £271m between October and December 2015, the largest quarterly total since this type of lifetime mortgage first emerged in 2004.
Seven in 10 new plans agreed in Q4 2015 were drawdown, up from 63% in Q3 2015, as more customers opted to withdraw their housing wealth in stages to boost their retirement income as and when they need it.
Drawdown lending for the whole of 2015 was also the highest on record at £961m.
It pushed total equity release lending activity by members of The Council¹ to an unprecedented £1.61bn: up 16% from £1.38bn in 2014.
Last year saw more than 22,500 new plans agreed for the first time since 2008.
Nigel Waterson, chairman of the Equity Release Council, said: “These year-end figures are the latest sign of growing reliance on housing wealth as a key pillar of later-life financial planning.
“The rising popularity of drawdown has been one of the success stories of the past decade, and product features have since appeared allowing customers to protect a percentage of their equity as an inheritance, make part-repayments of capital or make interest repayments on their loan.
“Looking ahead, the challenge is to continue developing products which meet consumer needs while ensuring that innovation is combined with protection and long-term sustainability.
“The work led by the council and its members to uphold standards for equity release products and advice has been fundamental to creating a safe market for consumers, and we will continue these efforts to meet growing customer demand alongside regulators and the government.”
Simon Chalk, equity release expert at Age Partnership, added: “The growing popularity of the drawdown type of lifetime mortgage can be partly attributed to borrowers wanting to leave more of their housing wealth intact.
“This product also gives homeowners the freedom to dip in and out of their housing wealth at their own leisure, such as for one-off expenses or to top-up income levels.
“It also helps to limit the interest on the loan as this is only applied after the funds have been taken.
“Crucially, the market continues to strive to support best practice and transparency so older homeowners can feel confident to enjoy their retirement years with the comfort of a product they understand and which allows them to tap into their existing wealth.”
