ER growth down to 65-74 year olds
That age group took out 58% of new plans in the first half of 2015, the highest market share since figures were first recorded in 2011.
Around a third of homeowners (35%) took out lump sum lifetime mortgages over the period, with most other customers taking out drawdown (65%) mortgages.
The age of the typical lump sum customer was 65 and they took out £77,494 on average, while drawdown products were typically utilised by 71 and 72 year olds who took out £46,958.
The ERC suggested that the younger lump some customers were drawing out larger sums to help with bigger items of expenditure as they enter retirement, such as clearing an existing mortgage or other borrowing.
Drawdowns, as reflected in the figures with smaller sums being taken out, are more helpful for contributing to the everyday cost of living without as much interest accruing.
Nigel Waterson, chairman of the Equity Release Council, said: “Appetite for using housing wealth as a source of funding in later life continues to grow, and equity release is playing an increasing role in helping people – especially those who are asset-rich and cash-poor – enjoy a better quality of life beyond the age of 55.
“As demand grows, it is vital that efforts are made to continue to uphold rigorous standards of financial and legal advice across the industry.
“Along with product protections, these are fundamental to ensuring consumer confidence and positive outcomes.”
He added: “With drawdown products having emerged as the majority preference, more recent innovations mean customers can opt for products that protect a minimum inheritance or enable monthly interest payments to begin with.
“The prospect of more new providers and different funding options emerging will build on this and help the market to satisfy wider demand.
“Equity release has been transformed since the 1980s, and we are committed to continuing this process – as well as growing awareness of the products, how they work and the role they can play in helping people to plan their finances in later life.”
Last week the Association of Mortgage Intermediaries chief executive Robert Sinclair indicated that the equity release market’s time has come, as he predicted £5bn of lending per annum by 2020.
Simon Chalk, equity release expert at Age Partnership, said: “We are witnessing a shift in attitude, as more people begin to appreciate that their housing wealth can be used and enjoyed, just like any other asset such as savings and pension funds.
“This belief is supported by the tremendous growth in property values that most customers have experienced. As this coincides with fixed interest rates being so low, we can expect to see more homeowners opting for equity release. Our recent research found that average rates for customers reached a record low of 5.82% this year.
“The onward march of drawdown lifetime mortgages is particularly noteworthy, telling us that more customers are prudently taking what they need, only when they need it. The changes heralded by the pensions freedoms have naturally helped retirees appreciate that their property wealth can equally be used to provide a regular flow of income or occasional lump sum.”
Helen Davies, head of implementation at Partnership, added: “Indeed, the rise in the number of 65-74 year olds using this product to improve their standard of living in retirement – an older cohort than might logically access the new freedoms – bears testament to a generation looking to their homes for financial support.
“There is also a clear delineation between lump sum and drawdown customers which shows the versatility of these products.
“With the promise of new providers bringing different products, it will be interesting to see how the market develops going forward.”