Equity Release achieves record-breaking year
This represents a 29% increase from 2013, while it exceeds the pre-recession high of £1.21bn recorded in 2007 by 14%.
More people took out equity release policies for the first time, as there were more than 21,000 new customers in 2014, the most recorded since 2008.
Two-thirds of new equity release customers (66%) chose drawdown products in contrast to just 25% in 2006.
Helen Davies, head of implementation at Partnership, said: “With the introduction of the new pension freedoms in April 2015 and more people actively discussing their retirement financing options, we expect to see the market continuing to grow and prosper into the future.
“Two different sets of customers appear to be developing – those who use a lump sum to clear outstanding debts at the start of their retirement and those who use drawdown to boost their income.
“This clearly highlights the different ways that equity release can support the over-50s and strongly support the case for future market development.”
Chris Prior, Bridgewater Equity Release manager, sales and distribution and Bower Retirement Services chief executive Geoff Charles also predicted market growth.
Prior said: “The outlook for the market is extremely positive and we would not be surprised to see 2015 figures touching, or perhaps even surpassing, the £2bn mark.”
And Charles added: “Our own advisers predict that the market could double in size in the near future, as equity release becomes firmly embedded into the retirement finance landscape.”
Equity release performed more strongly in the second half of the year, as lending totalled £741m after increasing by 16% from the first half and 25% since the second half of 2013.
In the fourth quarter of 2014 equity release lending totalled £365.7m, an 18% year-on-year increase from £310.2m recorded in quarter four 2013.
In the same period 5,712 new customers entered the market, the largest number in a single quarter for six years.
Nigel Waterson, chairman of the Equity Release Council, said: “These lending figures show that 2014 truly has been a record-breaking year for the industry.
“Equity release is proving to be a crucial tool for financial planning in retirement, and is allowing retirees to improve their standard of living and give them more flexibility to support themselves or family members.
“Many retirees have more wealth tied up in property than anywhere else, so it is only logical that this forms part of their plan to enjoy a comfortable retirement.
“The new pension freedoms won’t change the fact that many people do not have enough savings for later life.”