Mortgage repayments increased by 20% in H1 2021, to reach a record £38bn, according to the Equity Release Council’s (ERC) Autumn 2021 Market Report.
This is the equivalent of £200m a day, or £3,500 for every mortgaged household.
The ERC said the trend has been fuelled by regular repayments and overpayments reaching record heights, new borrowing ahead of the stamp duty deadline and fewer mortgage payment holidays.
The report found that the nation is now carrying over £1.5tn of mortgage debt for the first time on record, but factors including house price rises mean that for every £1 of mortgage debt, there is more than £3 of equity in homes.
The value of UK housing stock rose from £5.67tn to £6.42tn over the past year, with private property wealth reaching a new high of £4.87tn.
Strong performance in the housing market saw UK private property wealth increase from £4.21tn at the end of H1 2020 to £4.87tn at the end of H1 2021.
Households repaid more than £19bn of mortgage capital during both Q1 and Q2 2021, having never repaid more than £18bn in any previous quarter.
Rising property prices mean more than three quarters of the value of the average home has been tied up in equity rather than debt, leaving £201,642 of property wealth for an owner to draw on.
Across the first half of 2021, 35,860 new and returning customers were served, unlocking £2.3bn of property wealth.
Customer numbers steadily rose in H1 2021, with June seeing the most new plans agreed (3,348).
New customer levels remained broadly consistent with those seen in H2 2020, dipping slightly from 21,917 to 21,596 new plans taken out, but higher than this time last year when the first lockdown slowed activity (18,420).
Lifetime mortgage product options doubled in the past two years.
The total number of equity release products available increased to a record high of 668 in July 2021, from 448 six months earlier.
More than two-thirds (68%) of products allow customers to make voluntary capital repayments with no early repayment charge (ERC), while 89% of products offer fixed ERCs.
The average equity release rate rose to 4.26%, but there are still more options available today with rates of 4% or lower than a year ago.
The average age of new customers remained stable in H1 2021 at 70 years old for drawdown and 68.4 for lump sum.
And the average house price of new customers continues to rise to record levels for both drawdown (£419,166) and lump sum (£406,139) plans.
This came as UK property prices have increased over the last year to reach an average of £265,668.
David Burrowes, chairman of the ERC, said: “UK households are converting unprecedented amounts of mortgage borrowing into property wealth as we look to move on from the worst of the pandemic.
“Combined with property price rises fuelled by the stamp duty holiday, homeowners have record equity to potentially draw upon in later life.
“The transformation of later life mortgages in recent years has given people more opportunities to access their biggest source of wealth.
“We are seeing mindsets change to the point that tapping into property wealth is now a common consideration to meet various retirement needs, from topping up pension income to providing a ‘living inheritance’ via gifting to younger generations.
“The modern equity release market has shown resilience in the face of uncertainty to climb back towards pre-pandemic levels.
“The disruption of the last 18 months has not slowed the pace of innovation in lifetime lending, and it is important the market continues to evolve to address the financial challenges people will face in the post-pandemic world.”
Stuart Wilson, corporate marketing director of more2life, added: “Following the end of the stamp duty holiday and the severe disruption to markets and personal finances over the past 18 months, the news today that mortgage repayments have risen by 20% to record highs is a testament to the strength of the UK housing market and the savvy savings behaviour of UK consumers.
“Though the report does mention some grey clouds around the UK’s record level of mortgage debt, there is a significant silver lining in that rising house prices have led to the amount of equity in our homes being three times the level of debt owed.
“With a record high of £4.87trn of private property wealth in the UK, there is a fertile landscape for consumers looking to unlock the wealth tied up in their homes and afford the retirement lifestyle they deserve in their autumn years.
“The hard work of the equity release market to innovate and create better outcomes for borrowers is evident in the doubling of product options in the last two years, allowing consumers greater opportunity to find the right equity release product for them.
“Accessing property wealth remains one of the best ways for over-55s to achieve their forever homes, move closer to family or afford renovations to make life more comfortable, and today’s report shows that the market is working hard to live up to its potential and support later life borrowers in retirement.”