Older homeowners withdrew £3.92bn of housing equity in 2019 down slightly from £3.94bn in 2018, the latest figures from the Equity Release Council have shown.
Despite the small dip the market has grown almost four-fold in the last decade, with the annual value unlocked rising from £945.97m in 2009.
A total of 85,497 homeowners released equity in 2019 with the final quarter of the year being the busiest period with more than £1bn unlocked in Q4.
The Council’s Autumn 2019 Market Report showed that the average interest rate dropped to a record low of 4.91% in September 2019,2 partly the result of increased competition across the market.
During 2019, average withdrawals from new drawdown lifetime mortgages saw the average customer unlock £63,963 – double the annual income of a retired couple.
The average new lump sum customer unlocked £97,282.
David Burrowes, chairman of the Equity Release Council, said: “After a period of steady growth, the market has reached a point of consolidation in 2019 with lending volumes in line with 2018.
“The sector enters 2020 in a strong position with updated standards and a greater number of diverse members signed up than ever before.
“Looking ahead, we’ll continue to work with stakeholders to ensure consumers are able to access the best advice while ensuring joined up financial planning so that equity release remains a key consideration in mainstream retirement planning.
“Previously viewed as a niche product to support people’s retirement plans, the untapped potential of equity release is now being recognised.
“This comes as a growing number of customers are recognising the important role property wealth can play in meeting their retirement needs.”
Stuart Wilson, chief executive at Answers in Retirement Group, said the figures illustrated the maturity of the sector.
He said: “As a business fully immersed in the later life and equity release market, we believe these lending figures show the growing maturity of the market and to be just shy of £4bn of equity release lending in 2019 shows stability in activity and demand.
“From our own perspective, last year saw us achieve a 25% growth in new business, with average loan sizes dropping slightly which we believe reflects a focus on quality by advisers right across the sector.
“They are utilising new income-based products, with drawdown remaining the product of choice in the majority of cases.
“It was however noticeable that we saw a significant strengthening in activity during Q4, which we put down to a greater confidence in the political situation allowing later life borrowers to have confidence in their decisions.
“Looking ahead, our belief is that we’ll see later life lending activity continue to grow; all the demographic drivers that will fuel this are still in place such as lowering pension income prospects, increased longevity in retirement, and issues around the funding of care.
“The industry has driven huge product diversification and choice in 2019, so this year looks likely to see a return to positive growth with ever-increasing standards and choice for customers.”
Stephen Lowe, group communications director at Just Group, said it was a resilient performance against a backdrop of political uncertainty.
He added: “Last year was marked by considerable political uncertainty but despite this total lending for the year held steady, indicating that the underlying need for people to use the equity in their homes remains consistent.
“From the consumer and adviser point of view it has been an excellent year with greater competition between providers and increasing product flexibility so that it is easier than ever to tailor plans to needs.
“We are optimistic for 2020 because the underlying drivers of the market remain positive. More people are switching on to the idea of using the wealth in their homes to help meet their financial plans in later life – whether that is for extra income, lump sums to help with bigger ticket purchases such as home improvements or giving financial support to their family.
“Equity release is among the most closely scrutinised area of financial services but we welcome the Equity Release Council’s continued focus on pushing up standards further in order to give customers the confidence they need when considering how releasing equity should be part of their retirement planning.”