The number of new drawdown lifetime mortgages grew in Q2, Equity Release Council has found.
Some 7,227 new drawdown lifetime mortgages were taken out in the second quarter. This total was up 5% from Q1 2019 and 2% from Q2 2018.
David Burrowes, chairman of the Equity Release Council, said: “The number of people drawing on housing wealth in later life remains high by historic standards and remains an important mainstream funding option for many, despite short-term activity inevitably showing signs of the uncertainty that has impacted other areas of the economy in the current political climate.
“The long-term trend of an ageing population with more individual responsibility for funding retirement and lifestyle needs in later life is unchanged.
“The emergence of drawdown as the most common product choice shows how innovation has given customers more flexible options to build their plans around.
“Older homeowners are recognising the benefits of including their property wealth as part of their later life financial plans. Indeed, our research shows that more than 50% of people aged 45 plus already do so.”
More than two thirds (67%) of new plans taken out between April and June were drawdown, the highest share seen since Q4 2017.
In comparison, 3,502 new lump sum lifetime mortgages were taken out, higher than any quarter prior to Q2 2018 despite being the lowest quarterly total seen over the last year.
The industry data highlights the average size of new drawdown plans was consistent with the previous quarter in terms of customers’ first withdrawal, £63,166 versus £62,416 in Q1.
However, customers reserved more modest amounts of housing wealth for future use, £35,903 compared to £37,069 in Q1.
The average size of a new lump sum plan taken out in Q2 was also scaled back slightly to £93,712, 4% less than Q1.
Total clients served rose by 2% over the quarter to 20,866 and were up 3% year-on-year.
Although the number of new customers was down 1% on Q1 to 10,731, the number of returning drawdown customers increased by 7% to 9,154 over the same period. This was driven by more existing customers having these products.
Chris Knight, chief executive, Legal & General Retail Retirement, added: “Lifetime mortgages continue to be hugely popular. Thousands of consumers are unlocking their housing wealth to help them reach their retirement goals.
“The lifetime mortgage products available today give consumers more choice about how they release equity from their homes, and there is a clear trend developing for plans that allow for drawdown.
“Britain’s over-55s own nearly a trillion pounds of housing equity. As an industry, we need to do more to raise awareness about the benefits of lifetime mortgages, so that more people can unlock their housing wealth for a better, more colourful retirement.
“This data highlights the considered approach that customers take when accessing their property wealth; we will continue to see bricks and mortar play an important role alongside pensions, savings and other assets.”
Total lending fell slightly by 3% from April to June to reach £911.m, with the year-on-year comparison decreasing by 6%.
Following the busiest Q1 of any year to date, this meant overall market activity in the first half of 2019 was broadly in line with H1 2018.
A total of £1.85bn of housing wealth was unlocked in H1 2019, up slightly from the £1.84bn a year earlier.
Some 21,585 new plans were agreed, up from 21,490 in H1 2018, and a total of 41,263 customers were served, compared to 38,912 in H1 last year.
Nici Audhlam-Gardiner, managing director of lifetime mortgages at OneFamily, said: “It is great to see that there is continued growth in the market, as more homeowners see the benefit of releasingequity from their property.
“Year-on-year we’ve seen a minor increase in the value homeowners are releasing from their homes which now stands at £85,500 on average.
“The mix of why people are using equity release continues to evolve with an increase in homeowners using it to give a living inheritance since Q1 2019.”