• Total lending hits £315.5m in Q1, the biggest start to any year since records began
• Value of lump sum mortgages up 50% year-on-year while drawdown mortgages grow 25%

The equity release sector has made its busiest ever start to the year with the latest figures from the Equity Release Council (The Council) showing the largest first quarter lending total since records began.

Total lending through equity release in the first quarter of 2014 was £315.5m: an increase of 2% from the final quarter of 2013 and 35% year–on-year.

This is the most lending in any one quarter since Q3 2007 and the largest in any first quarter since quarterly records began in 2002 – 7% higher even than in 2007 when Q1 lending of £292.9m contributed to an annual peak of £1.21bn.

Lump sum growth outpaces drawdown mortgages

The total value of lump sum products grew by 50% year-on-year from £87.8m in Q1 2013 to £131.8m in Q1 2014. Lump sum mortgages accounted for 42% of the total value of first quarter lending, up from 38% a year earlier.

The total value of drawdown products also grew year-on-year, up by 25% from £145.7m in Q1 2013 to £182.5m in Q1 2014.

Lending through home reversion plans totalled £1.2m in Q1 2014, an increase of 142% from Q4 2013 and the largest amount in any single quarter since Q2 2012. This first quarter figure is almost two-thirds of the total value of home reversion plans agreed during the whole of 2013 (£1.9m).

Q1 lending through lifetime mortgages 

Nigel Waterson, Chairman of the Equity Release Council said:

“The figures show sustained growth in the equity release sector, maintaining the momentum from last year when lending activity returned to pre-financial crash levels. Equity release is taking on a growing role among the financial products to consider for retirement, with customers making the most of the flexibility to use their housing equity as they please.

“For a generation who have huge amounts of wealth tied up in property but a shortage of savings to support their retirement, equity release is providing financial stability to a growing number of older homeowners.

“While house prices are recovering across much of the country, we are seeing customers typically withdrawing only a quarter of the total value of their property through equity release. It gives them a substantial sum to help boost their income, clear existing debts, take on home improvement projects or pursue new activities and interests in later life – while still allowing many to preserve an inheritance to leave behind.”¹