Largest amount of equity release lending ever recorded – £1.4bn in 2014

20 January 2015

Embargoed for 00.01 on Tuesday 20th January 2015

 

Largest amount of equity release lending ever recorded – £1.4bn in 2014

Growing appeal among older homeowners sees market grow 29% year-on-year

 

  • Annual lending total is the highest since records began in 1992
  • More than 21,000 new customers in 2014 – the most recorded since 2008

        

The total value of equity release lending reached almost £1.4bn (£1.38bn) in 2014, according to the latest industry figures from the Equity Release Council (The Council). This is the largest annual figure since records began in 1992, exceeding the previous high (£1.21bn in 2007) by 14%.

 

This 2014 total is also a 29% increase from 2013, bringing the equity release market back above pre-recession levels as homeowners aged 55+ increasingly use their housing wealth to boost their finances and help with living costs in later life.

 

New data from The Council shows the value of equity release lending totalled £365.7m in Q4 2014: an increase of 18% year-on-year from £310.2m in Q4 2013. As a result, equity release lending reached £741m for the second half of the year. This is the largest amount in any half year since The Council began recording this in 2002, up by 16% from H1 2014 and by 25% since H2 2013.

 

Q4 2014 figures - press release - Graph 1 

Six-year high for new customer numbers

The number of new equity release customers also broke records with more than 5,700 over-55s releasing equity from their homes in the last three months of 2014.

 

There were 5,712 new customers in the final quarter of the year, which is the largest amount in a single quarter for six years (Q4 2008 – 7,526). This is an increase of 3% from the third quarter of 2014 and a 12% rise year-on-year.

 

It pushed the total number of new equity release customers in 2014 to 21,336, a 13% increase from 2013 and the largest yearly figure since 2008. Customer numbers have now grown for four consecutive years since the recession.

 G2 Q4 2014

The average value of equity release lending also hit a new milestone in 2014, reaching £64,787.  This is an increase of 14% from last year and exceeds the previous record of £60,504 in 1998 by 7%.

 

Drawdown products maintain popularity

Two-thirds of new equity release customers (66%) chose drawdown products in 2014, in contrast to just 25% of customers in 2006. Lump sum products now account for 34% of new plans while home reversion account for less than 1%.

 

However, drawdown products account for a smaller share of the market by value (60% or £825m during 2014), as these products allow retirees to take smaller sums as and when they need them, often allowing more of their housing wealth to be preserved.

 

 G3 Q4 2014

Nigel Waterson, Chairman of the Equity Release Council commented:

“These lending figures show that 2014 truly has been a record-breaking year for the industry. Equity release is proving to be a crucial tool for financial planning in retirement, and is allowing retirees to improve their standard of living and give them more flexibility to support themselves or family members.

“Many retirees have more wealth tied up in property than anywhere else, so it is only logical that this forms part of their plan to enjoy a comfortable retirement.  The new pension freedoms won’t change the fact that many people do not have enough savings for later life. There is a danger that people’s pension pots will be ‘here today, gone tomorrow’ – but housing wealth is the one constant that many in this generation can rely on for support.

“Increasing awareness of the available products and their benefits means that equity release will continue to thrive in 2015 and bring more help to our ageing population. Continued collaboration with all those in the sector, including the regulator and government, will support further innovations and maintain consumer protections. With talk of mainstream lenders and new offers arriving in the market, we anticipate big things for equity release in the year ahead.”

-Ends-

Notes to editors

For further information, please contact:

  • Andy Lane, Victoria Heslop or Sam Fisk at The Wriglesworth Consultancy, on 020 7427 1400 or email [email protected]

 

About The Equity Release Council:

The Equity Release Council was formed in May 2012 following the expansion of the remit of SHIP (the UK’s equity release trade body for product providers).  The new body now represents providers, advisers, intermediaries, lawyers and other interested parties with all members agreeing to abide by a strict set of principles as well as the code of conduct as originally established by SHIP.