Equity release market up 32pc
The value of equity release plans agreed in Q2 2014 was up 3% on the previous quarter and 32% on last year when Q2 sales were £246.4m.
As such the total value of equity release lending in the first 6 months of 2014 hit £641.2m, the largest sum on record for the first half of the year and a 34% increase on 2013 as more people aged 55+ draw on their housing equity to boost their finances in later life.
The half-year figures show that equity release lending has exceeded pre-recession levels and eclipsed the previous peak of 2007, with the H1 2014 total up 8% on the £595.9m seen in H1 2007.
There were 5,275 new equity release customers in Q2 2014, a 10% increase on the last quarter: pushing the total number of new customers past 10,000 for the first half of the year.
The average equity release plan in Q2 2014 was £61,734, an increase of 16% year-on-year.
The value of new lump sum mortgages taken out increased by 48% year-on-year in the first half of 2014 to £260.3m.
This is the highest total for lump sum plans in the first half of a year since H1 2008 when the value hit £275.3m. The value of drawdown plans also increased with H1 2014, witnessing a 25% rise year on year to £379.3m.
Lump sum mortgages now account for 41% of new equity release sales by value, up from 37% for the last six months of 2013. While home reversion plans account for less than 1% of the overall equity release market, lending through these products in H1 2014 also recorded a significant annual increase of 68%.
Nigel Waterson, chairman of the Equity Release Council, said: “Despite the commotion caused by the Budget’s changes to the retirement market, equity release lending remains not only intact but goes from strength to strength.
“We are continuing to witness record growth as more asset-rich over-55s take advantage of products that can provide them with security and stability for the future.
“While the majority of customers continue to opt for drawdown products offering income in regular instalments, it is interesting to see the shift towards lump sum products over the past few years.
“It is likely to be a side effect of the number of people with a mortgage still to pay off in later life, or looking to release some of their equity to help their children onto the property ladder.
“Financial planning for retirement is as much in the spotlight as ever and equity release remains a key part of this discussion – especially now that people approaching retirement will have greater autonomy in how they use their pension assets.
“A holistic approach is called for where equity release forms part of a wider discussion about financial planning for later life which includes property, pensions, annuities and savings.”