The equity release market reached a new high last year with £1.61bn gross lending, figures from the Equity Release Council have confirmed.
The equity release market reached a new high last year with £1.61bn gross lending, figures from the Equity Release Council have confirmed.
The second half of 2015 saw a 26% rise in the value of lending compared with the first half, from £710m in H1 to £898m in H2.
This is the biggest half-year growth rate of the post-2008 era, beating a previous high of 24% between H1 and H2 2013.
The trend was mirrored in the volume of new plans, rising 21% between H1 and H2 2015, also more than any other year post-2008.
While 65-74 remains the most common age for taking out an equity release plan (54.4%), H2 2015 was the second successive year to see a rise in the percentage of new plans agreed by customers aged 55-64 when compared to H1: up from 17.5% to 21.2% in this period.
The average initial amount of housing wealth unlocked by equity release customers via drawdown mortgages in H2 2015 was £49,607.
The average lump sum mortgage withdrawal was £81,324.
Nigel Waterson, chairman of the Equity Release Council, said: “There is growing recognition from UK consumers, regulators and politicians that housing wealth can – and should – play a greater role in financial planning for retirement.
“Greater choice from new and existing providers is driving the appeal of equity release, with product features emerging that allow more freedom to make capital repayments and pay interest on some loans.
“We expect this trend to continue, and the challenge for industry and regulators is to ensure product innovation is combined with consumer protection and long-term sustainability.”
Simon Chalk, equity release expert at Age Partnership, said: “As the repercussions of the Mortgage Market Review’s tougher lending criteria continue to stack against older borrowers, more customers in the 55-64 age bracket are opting for equity release as an alternative to more traditional routes.
“This is especially the case among those who took out interest-only mortgages and are looking for an alternative method of repayment.
“In 2015, we saw a rise of 68% in interest-only borrowers turning to equity release as a solution for their debt from the previous year.”
