Embargoed until 00.01 on Monday 30^th October 2017

New equity release plans rise by a third as lending passes £800 million in a single quarter for first time

• Value of quarterly lending in Q3 2017 rises 44% year-on-year as growing numbers look to housing wealth as a core pillar of financial planning for retirement
• 9,905 new plans were agreed from July to September, a rise of 34% from Q3 2016 
• In total, the sector saw activity from almost 18,000 new or returning customers in Q3 2017
• Demand for drawdown products continue to rise – accounting for over three quarters of all new products taken out

Over-55s withdrew a total of £824 million of property wealth from their homes via equity release plans during Q3 2017, according to the latest quarterly figures from the Equity Release Council (The Council)¹, as increased competition and a continued commitment to consumer safeguards supported arise in new customer numbers and lending activity between July and September.

Total lending surpassed the £701m recorded in Q2 this year to become the highest figure seen in any single quarter since The Council began tracking quarterly activity in 2002. This represents a 44% year-on-year increase from Q3 2016 when lending stood at £572 million.

Members of The Council recorded a total of 17,982 customers between July and September, up by 12% from Q2. Of these, 9,905 of were new customers, representing a 17% quarterly increase from Q2 and a 34% annual rise compared with Q3 2016.

The remainder were made up of 6,849 returning drawdown customers releasing housing wealth in instalments (up from 6,566 in Q2) and 1,138 further advance customers agreeing extensions to existing plans (up from 1,002 in Q2).

The growing range of products on the market and increasing consumer appetite to use housing wealth as a source of retirement finance mean that Q3 lending activity has now risen by 82% in the last two years, up from £453 million in Q3 2015. New customer numbers have risen 64% over the same period from 6,049 in Q3 2015.

Continued rise in drawdown customers

A further shift towards offering more breadth across drawdown lifetime mortgages to reflect consumer demand has meant the proportion of new customers choosing this option over lump sum lifetime mortgages or home reversion plans in Q3 2017 rose by nine percentage points to 77% from the previous quarter (68%) and 15 percentage points year-on-year (from 62%).

Drawdown products typically see customers releasing smaller amounts of equity to begin with (£64,793 in Q3 2017 vs. £100,389 via lump sum plans), therefore reducing the build-up of interest over the duration of the plan. It also provides customers with the flexibility to unlock further sums via future instalments as and when they need to.

Nigel Waterson, Chairman of the Equity Release Council, commented: 

“The sustained growth in housing wealth withdrawals is indicative of a wider shift in the way consumers are approaching their retirement planning, by taking a broader range of financial options into consideration.

“Property is, for many people, their largest asset and has the potential to play an increasingly important role in the future of retirement funding. The combination of rigorous safeguards and flexible products in today’s market is one reason why housing wealth is now being used to support a wide range of financial goals. These range from boosting pension income and supporting retirement lifestyles to funding home improvements and adaptations, consolidating debts and providing a living inheritance to younger generations.

“As more homeowners look to housing wealth as a source of retirement finance, The Council and its members will continue to ensure the highest standards of customer protection are in place alongside the continuing innovation that has seen the available product range triple since 2007*.”

-Ends-

For further information, please contact:

• Jordan Campbell, Amy Boekstein or Sam Ferris at Instinctif Partners, on 020 7427 2020 or email [email protected]

* Source: Equity Release Market Report, Autumn 2017

About the Equity Release Council

www.equityreleasecouncil.com

The Equity Release Council is the industry body for the equity release sector, which represents over 650 members including providers, qualified financial advisers, solicitors and other industry professionals.

It works to ensure a safe equity release market for consumers, by operating rigorous Standards for the provision of advice and products which guarantee security of tenure and financial protections. 2016 marked the 25th anniversary since the first industry Standards were created for equity release in 1991. Since then, almost 400,000 consumers have taken out an equity release plan from Council members, drawing on over £20bn of housing wealth.

The Council also works with consumers, industry and policymakers to improve awareness and understanding of equity release and the potential for housing wealth to help solve many of the financial challenges facing people over the age of 55 across the UK.