We are delighted to share the Council’s Annual Review for 2024, showcasing the impact we’ve made together over the past year.  The report highlights how we’ve delivered value to you, our members, and the wider sector while setting the stage for an ambitious year ahead.

Jim Boyd, Council CEO said: “As a membership organisation, the Council is proud to represent the entire later life lending value chain – funders, providers, advisers, lawyers, surveyors, and other market professionals – all working together to drive positive change.

“Our logo has become a trusted symbol of high standards and positive consumer outcomes. While we may be a small organisation, our collective reach, impact, and ambition are far-reaching, and this is only possible because of the commitment and trust of our members.

“This year, the Council has played a pivotal role in bringing together industry, regulatory, consumer, and political stakeholders to explore the vital role property wealth can play in supporting later life finances. Thanks to our members’ support, we will continue to speak with authority on the purpose, challenges, and potential of this growing sector.

“By working collaboratively with our members, we will continue to lead a consumer-focused market, setting authoritative standards that go beyond formal regulation. Together, we look forward to building on this momentum and driving progress into 2025 and beyond.”

To read the report in full please click here.

New customer revival drives 15% rise in Q2 equity release lending

To read the full report please click here

Overall activity		Quarterly change	Annual change
Total lending	£578m	+15%	-13%
Total customers	14,324	+1%	-16%
New customers	5,240	+12%	-22%
Returning drawdown customers*	8,051	+4%	+3%
Further advance customers*	1,033	-41%	-59%

The Equity Release Council’s latest quarterly market report shows that new customer numbers rose by 12% in Q2, compared with Q1, while total lending rose 15% to £578m.

A double-digit rise in the number of customers taking out new products made Q2 2024 the busiest quarter for almost a year for the equity release market in terms of total customers served and total lending activity.

In addition, existing drawdown customers, who are allocated a cash reserve when they first take equity release, continued to make use of this facility.

A 3% increase to 8,051 returning drawdown customers during Q2 made this the most resilient part of the market when comparing activity year-on-year.

Increases in average loan sizes on both a quarterly and annual basis offer another sign of returning customer confidence. New drawdown customers are making larger initial withdrawals and reducing the amount held in reserve.

The Council’s data is unique in that it is made up of aggregated figures collected from all UK equity release providers, encompassing business from advice firms across in the market.

Average loan sizes		Quarterly change		Annual change
New lump sum	£110,969	+7%		+18%
New initial drawdown	£65,453	+10%		+10%
New drawdown reserve facility	£45,839	-17%		-7%
Returning drawdown	£12,097	+1%		+6%
Lump sum further advance*	£28,192	+67%		+25%
DD initial further advance*	£26,641	+16%		+10%
DD further advance reserve facility*	£8,296	+25%		-41%
Product choice among new customers	Drawdown: 56%		Lump sum: 44%

David Burrowes, chair of the Equity Release Council, said:

“Following a period of economic uncertainty, we are starting to see consumer confidence gradually return to the market with increasing numbers of new customers choosing to use their housing equity to support their needs in later life.

“The pick-up in activity between the first and second quarters is a welcome reversal of the downward trend seen one year ago. There is a long way to go to unlock the market’s full potential, but there are reassuring signs in these figures that we are turning the corner and acclimatising to this unfamiliar interest-rate environment after years of rock-bottom rates.

“Almost 20 years on from their introduction, it’s notable that drawdown products are becoming the majority preference once again. Some of the new flexibilities embedded into the modern market such as fixed early repayment charges are equally designed for the long-term and set up so that customers can benefit from years to come.

“Adviser feedback suggests customers are continuing to find a variety of uses for their property wealth, with gifting and funding home improvements both key motives behind activity in Q2 along with boosting everyday income and closing pension shortfalls.

“However, refinancing an existing mortgage, including interest-only loans, continues to rank as the biggest driver of current market activity. The innovative design of modern lifetime mortgages means anyone taking this route will have lots of ways to smooth the transition, not least the freedom to make repayments when they can afford to without the risk of repossession looming over them.”

*  The relatively small number further advances taken out (1033 in Q2 2024) means that data on this specific metric is more volatile.

About the data: The Council’s market data is compiled from actual whole-of-market returns and is in no part estimated, making it the UK’s definitive equity release data. All data has been collated by the Council, unless otherwise stated.

About the product: Equity release allows older people to access the wealth in their homes, without necessarily having to sell or move. Lifetime mortgages make up more than 99% of the market. They enable people to borrow against their homes without making repayments unless they choose to. The loan and interest, or part thereof, is paid when the customer dies or goes into long term care. Since 1991, more than 675,000 homeowners have accessed £49bn of property wealth via Council members to support their finances.

About the Council: The Council is the representative trade body for the UK equity release market. Plans that meet the Council’s standards come with five product safeguards: no negative equity guarantee; fixed or capped rates for life; the right to port; the right to make overpayments; and secure tenure for life. These safeguards are underpinned by mandatory independent legal advice which ensures the customer understands the risks and implications of the plan.

More information: Call Andy Lane and Libby Wallis at Instinctif Partners on 0207 457 2020; email [email protected].

Drawdown in vogue as equity release market ‘maintains holding pattern’ in Q1

• 14,216 new and returning customers made use of equity release products between January and March, up 4% from Q4 2023 (13,651).
• Returning customers drove a 6% quarterly increase in drawdown activity as confidence held firm amongst those with existing plans.
• 56% of new customers opted for drawdown lifetime mortgages, the highest quarterly share since the Bank of England began to increase the base rate from 0.1% in Q4 2021.
• New customer numbers dipped 11% on Q4 2023 and when coupled with the shift towards drawdown, resulted in total lending of £504m for Q1, down 6% from £535m in Q4 2023.

David Burrowes, Chair of the Equity Release Council, comments:

“The Q1 2024 data highlights the ongoing challenges facing the residential property market in the UK as the nation waits to see what happens next with interest rates and the health of the economy.

“In our market, consumer confidence is holding up well among people with existing plans, who are not shy of making use of drawdown facilities or exploring further advances. New customer numbers are lower than last year with feedback from the market suggesting that older homeowners are adopting a more cautious approach to borrowing as there are hopes of interest rate reductions in the near future.

“The flexibilities offered by modern lending products are becoming increasingly popular as customers use them to manage their borrowing in a way that best meets their individual circumstances. New customers are choosing drawdown plans with smaller initial advances while existing customers are being more modest about their borrowing compared to the start of last year.

“As we look to the rest of 2024, we are confident that the green shoots that we are starting to see will germinate and the market will return to growth.  Structural drivers of the later life lending sector are only due to intensify over the coming years and Council members are ready to support clients as they make sustainable long-term choices about their finances.”

Overall activity

• Of the 14,216 customers who were active in the equity release market between January and March 2024, 55% were drawdown customers taking withdrawals from existing plans. One in three active customers took out new plans (33%) while the remaining 12% agreed further advances (extensions) on existing plans. [see Graph 1]
• Total quarterly lending of £504m remained subdued due to the dip in new customers and the growing preference for drawdown products, where customers hold a significant chunk of their loans in reserve for future use.

Trends among new customers

• New customer numbers (4,698) were 11% lower in Q1 than in Q4 2023 and 31% lower than in Q1 2023. With rumours of an interest rate cut ahead of summer, potential new customers are adopting a ‘wait and see attitude’ unless they have a pressing need for the funds.
• Drawdown lifetime mortgages recorded their highest share of new customer activity in Q1 for more than two years. While 45% of new customers opted for drawdown in Q2 2022, 56% made that choice in Q1 2024.
• New drawdown customers typically agree larger loans than lump sum customers, averaging £114,911 vs. £103,492 in Q1. However, with only £59,660 taken upfront, flexible product design makes it possible to benefit from future rate cuts by holding the remainder back for future needs, with each withdrawal charged at the prevailing rate at the time. [see Graph 2]
• Q1 2024 saw new drawdown customers minimising the impact of higher interest rates by reducing the first instalments of their loans by 4% to £59,660, compared with £62,198 in Q4 2023, and increasing their reserved facility by 35% to £55,251 from £40,962 in Q4.
• New drawdown customers are now taking just 52% of their loans upfront with the rest held in reserve. This compares to a 66% average being taken upfront from 2017-2022. [see Graph 3]

Trends among returning customers

• The number of returning drawdown customers taking instalments from their reserve facility reached 7,753 in Q1 2024, an increase of 6% on Q4 2023 (7,314).
• Each returning drawdown customer took £12,822 on average, up by 9% from £11,782 in Q4 but still 4% lower than was the case a year earlier in Q1 2023 (£13,345).
• In line with Equity Release Council standards, the interest rate is fixed or capped for each new instalment at the point of withdrawal, protecting customers’ borrowing from any future rate rises.
• With 1,765 further advances agreed in Q1, existing customers remain confident in seeking extensions on their plans, helped by the long-term growth of property prices leaving them with more equity to withdraw within the careful loan-to-value limits set by providers.

Market data

Graph 1: Equity release customer numbers per quarter by customer type

Graph 2: Average new loan sizes among equity release customers

Graph 3: Breakdown of new drawdown lifetime mortgages between initial loan and reserves

About the data

The Equity Release Council’s market statistics are compiled from member activity, which includes all national providers in the equity release market. This latest edition was produced in April 2024 using data from customer activity during the first quarter of the year (January to March). All figures quoted are aggregated for the whole market and do not represent the business of individual member firms.

Equity release products are available to homeowners aged 55+, enabling them to release money from the value of their home following a regulated process of financial advice and independent legal advice to determine whether this is suitable for their individual circumstances and long-term needs. Funds released are typically used for a range of purposes including providing additional retirement income, funding one-off expenses and lifestyle purchases, consolidating debts, meeting homecare costs and gifting a ‘living inheritance’ to family or friends.

For a comprehensive list of members, please visit the Council’s online member directory.

About the Equity Release Council

The Equity Release Council is the representative trade body for the UK equity release sector with more than 750 member firms and 1,900 individuals registered, including providers, funders, regulated financial advisers, solicitors, surveyors and other professionals.

It leads a consumer-focused UK based equity release market by setting authoritative standards and safeguards for the trusted provision of advice and products. Since 1991, more than 650,000 homeowners have accessed £46bn of property wealth via Council members to support their finances.

The Council also works with government, voluntary and public sectors, and regulatory, consumer and professional bodies to inform and influence debate about the use of housing wealth in later life and retirement planning.

For more information:

Visit www.equityreleasecouncil.com

Email Instinctif Partners at [email protected]

Phone Andy Lane and Libby Wallis on +44 (0) 207 457 2020

 

• New and returning equity release customers in Q4 totalled 13,651, down from 17,078 in Q3 2023 and 20,597 in Q4 2022.
• Throughout 2023, 26,119 customers took out new equity release plans, with drawdown plans restored as the majority preference – attracting 53% of customers last year and 55% in Q4.
• The average amount borrowed by new customers in Q4 2023 was £79,484, compared to £106,917 a year prior.
• With smaller loan sizes and the ability to make voluntary partial repayments on all new plans, customers are better able to manage their exposure to higher interest rates
• 2023 saw 64,448 active customers taking out new plans, making use of drawdown reserves or agreeing extensions to existing plans, down 31% year-on-year.
• Total annual lending of £2.6bn in 2023 followed a record-breaking £6.2bn in 2022, returning the market to the level of activity last seen between 2016 to 2017 (£2.1bn to £3.1bn).

David Burrowes, Chair of the Equity Release Council, said:

“Every corner of the mortgage market saw rising interest rates put the brakes on activity in 2023, and equity release was no exception with customers and their advisers taking a cautious approach. This resulted in loan sizes shrinking and fewer people borrowing for more aspirational reasons.

“While we’ve grown accustomed to stronger demand in recent years, we shouldn’t lose sight of how far the market has matured since activity was last at these levels. New product features and customer protections mean we are well positioned to serve the inevitable demand that will come as confidence returns. Council standards represent the pinnacle of protection for older consumers, which makes it crucial for them to seek out a member firm when exploring their options.

“It’s clear some people are holding out for future rate cuts, but with no timeline as to when this may happen or how sustained this will be, older homeowners will need to continue to consider what is right for their individual circumstances. Many people are relying on their property wealth to retire in comfort, and we are focused on ensuring they can access it confidently and securely.

“Whether the customer wishes to top up their pension, support their family or manage their borrowing in retirement, today’s products offer more flexible options to help manage costs, with voluntary repayments baked into every new plan. Ultimately it is about choice and it is vital that people plan carefully for the future and only commit to long-term products after careful consideration, expert advice and consulting with loved ones.”

1. Key statistics

Overall activity for Q4 2023:

• The number of new and returning customers in Q4 was 13,651, down from 17,078 in Q3 2023 and 20,597 in Q4 2022
• Customers accessed £535m of property wealth via equity release products between October and December. This was broadly in line with the quarterly average from 2016 and made the final quarter the quietest of 2023.
• Across all product types, the average amount borrowed by new customers in Q4 2023 was £79,484, compared to £106,917 a year prior.

Overall activity for FY 2023:

• The year as a whole saw 64,448 active customers either taking out new plans, making use of drawdown reserves or agreeing extensions to existing plans. This was a 31% decrease year-on-year from 93,421 in 2022 [see graph 1].
• Total lending of £2.61bn in 2023 followed a record-breaking £6.2bn in 2022, returning the market to the level of activity last seen between 2016 to 2017 (£2.1bn to £3.1bn).

New customer trends for Q4 2023:

• A total of 13,651 new plans were agreed between October and December 2023. This was the lowest quarterly total of the year, mirroring the seasonal pattern seen in 2022.
• More than half (55%) of new customers opted for drawdown lifetime mortgages in Q4, the highest percentage of the year and up from 47% in Q4 2022.
• New drawdown customers decreased their initial borrowing by 25% year-on-year by taking £62,198 upfront compared with £82,643. They reserved a further £40,962 for future use, giving a total loan size of £103,160, down 22% from £132,861 a year ago.
• New lump sum customers took a similar total amount (£100,978) as a single withdrawal, which was 21% less than the average £128,382 lump sum plan from Q4 2022.

New customer trends for FY 2023:

• Overall, 2023 saw 26,119 new plans agreed, a drop of 47% from 49,285 in 2022. The majority preference (53%) shifted back towards drawdown lifetime mortgages, reversing the split from 2022 when lump sum lifetime mortgages made up 52% of new product sales [see graph 2].
• This shift demonstrates the additional flexibility that customers are seeking to manage higher interest rates. With interest only applied as money is withdrawn, drawdown plans come with the benefit that, if rates fall, future withdrawals could be charged at a lower rate.
• Comparing 2023 to 2022, new lump sum customers decreased their average loan sizes by 26% from £131,687 to £97,878 – the first time this borrowing has been below £100,000 since 2019.
• New drawdown customers agreed similar reserve facilities in 2023 as 2022 (£43,687 vs. £45,625) but cut back their initial borrowing by 31% from £89,242 to £61,652 [see graph 3].

Returning customer trends for Q4 2023

• The final quarter saw 7,314 existing drawdown customers dip into their agreed reserves. While this was down 14% from 8,466 in Q3, it represents a 3% uptick from 7,071 in Q4 2022.
• The average instalment taken by a returning drawdown customer was £11,782 in Q4, down from £12,700 in Q3 2023 and £14,180 in Q4 2022. Taking smaller instalments while rates are higher will again limit customers’ exposure to higher costs.
• Further advance activity in Q4 2023 returned to levels typically seen from 2017-2021, with 1,045 extensions agreed to existing plans. This compares to 1,233 in Q3 2023 and 2,352 in Q4 2022.Returning customer trends for FY 2023:
• Across 2023 as a whole, 31,329 returning drawdown customers took funds from their agreed reserves. This was down moderately from 35,474 in 2022 but higher than the 2021 figure (30,521), meaning this area of the market has been the most resilient in the face of higher interest rates.
• For the full year, 7,000 customers agreed extensions to their existing plans. While this was a fall from 8,662 in 2022, it represents a significant increase on 4,669 from 2021. Recent years of renewed house price growth across the UK will have provided some homeowners with more equity in their homes to draw on as they look to offset rising living costs.

2.      Market data

To view the graph data please download the full release here.

3.      About the data

The Equity Release Council’s market statistics are the definitive measure of equity release activity, using whole-of-market data encompassing including all active UK providers and advice firms. This latest edition was produced in January 2024 using data from customer activity during the fourth quarter of the year (October to December). All figures quoted are aggregated for the whole market and do not represent the business of individual member firms.

Equity release products are available to homeowners aged 55+, enabling them to release money from the value of their home following a regulated process of financial advice and independent legal advice to determine whether this is suitable for their individual circumstances and long-term needs. Funds released are typically used for a range of purposes including providing additional retirement income, funding one-off expenses and lifestyle purchases, consolidating debts, meeting homecare costs and gifting a ‘living inheritance’ to family or friends.

For a comprehensive list of members, please visit the Council’s online member directory.

4.      About the Equity Release Council

The Equity Release Council (the Council) is the representative trade body for the UK equity release sector with more than 750 member firms and 1,800 individuals registered, including providers, funders, regulated financial advisers, solicitors, surveyors and other professionals.

It leads a consumer-focused UK based equity release market by setting authoritative standards and safeguards for the trusted provision of advice and products. Since 1991, more than 650,000 homeowners have accessed £46bn of property wealth via Council members to support their finances.

The Council also works with government, voluntary and public sectors, and regulatory, consumer and professional bodies to inform and influence debate about the use of housing wealth in later life and retirement planning.

For more information:

Visit www.equityreleasecouncil.com

Email Instinctif Partners at [email protected]

Phone Libby Wallis, Andy Lane and Mike Norris on +44 (0) 207 457 2020

• Equity release market sees growth for the first time in 12 months with quarterly increases in both new customers (10%) and total lending (8%).
• Total lending reaches £716m in Q3 loaned to 7,379 new customers and 8,466 returning drawdown customers.
• The average initial drawdown is £63,238 but returning customers have the potential to borrow more in the future at the prevailing rate.
• The average lumpsum is £94,806 but both lumpsums and initial drawdowns are down about a third on an annual basis.
• Market remains suppressed at 2017 levels with new customers down (45%) and total lending down (58%) on an annual basis.

David Burrowes, Chair of the Equity Release Council, said: “These figures suggest the process of building back is slowly underway in the equity release market, after a period where higher interest rates have prompted consumers and industry to reach for the ‘reset’ button.

“With customers starting to venture back, the market is at the start of a gradual but fragile road to recovery, with pent-up demand likely to emerge in future years as the interest rate cycle begins to turn again.

“While the clock has been wound back on lending activity and loan sizes, product innovation has increased the flexibility of lifetime mortgages.

“New customers of plans that meet our high consumer standards can use voluntary repayments to keep their costs in check while existing customers are free to take extra instalments of money as they need it, safe in the knowledge their previous borrowing is fully insulated from rate rises.

“Looking ahead, we must be wholly committed as an industry to putting equity release in its proper context as one of a range of later life lending options and putting property wealth in its proper context at the heart of every retirement planning conversation.”

Key statistics for Q3 2023 

Overall activity

• A total of 17,078 new and returning customers used equity release products – primarily lifetime mortgages – between July and September 2023 to unlock wealth from their homes.

• The number of active customers this quarter was very slightly up from 17,028 in Q2, although it remained down 33% year-on-year from 25,519 in Q3 2022
• A total of £716m was unlocked by new and returning customers between July and September. This represents an increase of 8% on the previous quarter (£663m) and meant Q3 was the busiest quarter of 2023 so far for lending.
• Currently lending activity of c.£700m per quarter is broadly in line with levels last seen during the first half of 2017, excluding the first lockdown during the Covid-19 pandemic

Trends among new customers

• The number of new plans agreed during Q3 2023 was 7,379. This was up by 10% from 6,682 in the previous quarter, indicating a slight improvement in consumer confidence and market conditions, although the total remained 45% lower than Q3 2022 which saw 13,452 new plans
• Data from Moneyfacts Group PLC indicates that equity release product pricing improved from an average rate of 7.52% in July to 6.63% in September¹. The Council’s Autumn 2023 Market Report shows that the gap between lifetime and residential mortgage rates has fallen significantly both over the last decade and in the last 12 months, making lifetime mortgages more competitive even in an environment of higher interest rates.
• On a monthly basis, new customer numbers rose to 2,502 in July, up from 2,462 in June, and peaked at 2,577 in August before dipping back to 2,300 in September.
• New customers were broadly split when it comes to product choice: 53% opted for drawdown lifetime mortgages, taking an initial withdrawal up-front with more held in reserve for future use, while 47% of customers opted for a single lump sum. This reversed the trend in Q3 2022 when the equivalent split was 48% drawdown and 52% lump sum.
• The combination of customer caution, higher interest rates and lower maximum product loan-to-values (LTV) has seen customers reduce the amount they borrow over the last year:

• • At £63,238, the average first withdrawal from a new drawdown plan was 28% lower in Q3 2023 than a year earlier (£88,340 in Q3 2022).
  • This average first withdrawal is on a par with the average from Q3 2019 (£63,222), despite UK house prices having risen by a quarter (25%) since September 2019.²
  • The average new lump sum lifetime mortgage from July and September was also 29% lower with customers taking £94,806 compared to £133,770 a year earlier. This is the lowest average since Q2 2019 (£93,712).

Trends among returning customers

• With interest rates fixed or capped at the point of withdrawal for products which meet Council standards, the number of drawdown customers making new withdrawals from existing loans rose by 8% in Q3 2023 compared to Q2 2023, from 7,817 to 8,466.
• While returning drawdown numbers are still 12% down year-on-year, this part of the market has been the least impacted by the slowdown. This is likely due to existing customers being able to limit the impact of higher interest rates by borrowing incrementally, with their existing borrowing protected from rising rates.
• In common with new customers, returning customers reduced their borrowing in Q3 compared to a year earlier, withdrawing £11,863 on average – down 9% from £12,968.
• The number of further advances (loan extensions) agreed on existing plans fell significantly in Q3 2023, with the total of 1,233 down by 51% from 2,529 in Q2 2023. This is also a 49% decrease compared to a year ago when 2,419 further advances were agreed.

Details of equity release product features and pricing are available via the Autumn 2023 Market Report.

Market data

To view the following graphs download the Q3 data on PDF

Graph 1: Equity release customers numbers, by type of customer, Q1 2018 to Q3 2023

Graph 2: Number of new equity release plans agreed per month, July 2020 to September 2023

Source: Equity Release Council

1. About the data

The Equity Release Council’s market statistics are compiled from member activity, including all national providers in the equity release market. This latest edition was produced in July 2023 using data from customer activity during the second quarter of the year (April to June). All figures quoted are aggregated for the whole market and do not represent the business of individual member firms.

Equity release products are available to homeowners aged 55+, enabling them to release money from the value of their home following a regulated process of financial advice and independent legal advice to determine whether this is suitable for their individual circumstances and long-term needs. Funds released are typically used for a range of purposes including providing additional retirement income, funding one-off expenses and lifestyle purchases, consolidating debts, meeting homecare costs and gifting a ‘living inheritance’ to family or friends.

For a comprehensive list of members, please visit the Council’s online member directory.

¹ Data sourced from Moneyfacts’ Equity Release Analyser.

² Office for National Statistics, UK House Price Index, August 2023, showing a 25% increase in average UK house prices from £233,536 in September 2019 to £291,000 in August 2023.

1. About the Equity Release Council

The Equity Release Council is the representative trade body for the UK equity release sector with more than 750 member firms and 1,900 individuals registered, including providers, funders, regulated financial advisers, solicitors, surveyors and other professionals.

It leads a consumer-focused UK based equity release market by setting authoritative standards and safeguards for the trusted provision of advice and products. Since 1991, more than 650,000 homeowners have accessed £46bn of property wealth via Council members to support their finances.

The Council also works with government, voluntary and public sectors, and regulatory, consumer and professional bodies to inform and influence debate about the use of housing wealth in later life and retirement planning.

For more information:

Visit www.equityreleasecouncil.com

Email Instinctif Partners at [email protected]

Phone Andy Lane and Libby Wallis on +44 (0) 207 457 2020

• More than £21bn of mortgage capital is being paid off per quarter via regular repayments or overpayments, up from £17bn before the pandemic
• New lifetime mortgage customers reduced their loan sizes in H1 2023, despite the average home holding over £222,000 of equity
• Keeping up voluntary partial repayments of £2,500 per year could save the average lifetime mortgage customer nearly £70,000 over fifteen years

UK mortgage holders are repaying record amounts of mortgage debt in the higher interest rate environment, according to the Equity Release Council’s Autumn 2023 Market Report.

But high levels of debt and a lack of pension savings make it increasingly likely that homeowners will need to borrow against the value of their properties in later life to make ends meet.

The Council report explores the impact of higher interest rates on the lifetime mortgage and wider mortgage market during the first half of 2023.

It shows regular and one-off capital repayments across the mortgage market have totalled more than £21bn per quarter since Q4 2022, according to official data, up from £17bn before the pandemic*.

Total UK mortgage debt remained stubbornly high at £1.63tn in mid-2023. Despite this, the average home contains equity of £222,526: significantly more than the average pension**.

Lifetime mortgage customers show signs of caution

Among older homeowners already using lifetime mortgages to release equity from their homes, the Council’s data shows a shift in borrowing patterns during H1 2023.

Compared with a year earlier, the average new lump sum or drawdown lifetime mortgage customer withdrew a smaller amount of money and a smaller percentage of their overall housing wealth.

As well as a sign of customer caution, this has also resulted from lower maximum loan-to-values (LTVs) as providers have adjusted to higher interest rates.

Table 1: How new lifetime mortgage borrowing has adapted to higher interest rates

	Lump sum lifetime mortgages		Drawdown lifetime mortgages
	H1 2022	H1 2023	H1 2022	H1 2023
Property value	£423,556	£380,087	£441,270	£428,539
Rate	4.00%	6.66%	3.43%	6.28%
Loan	£132,085	£98,407	£134,692 with £92,580 upfront	£104,443 with £60,534 upfront
Loan-to-value	31.2%	25.9%	30.5%	24.4%

Source: Equity Release Council data

The Council’s data also shows customers continued to use the flexibility of voluntary penalty-free partial repayments when they can afford to. The average partial repayment was £2,527 in H1 2023.

If a new customer with a loan of £100,000 made this repayment every year over a 10-year period, they would reduce their borrowing costs by £37,845. Over 15 years, they would save £69,305.

All products that meet Council standards allow new customers to make voluntary partial repayments with no early repayment charge (ERC), typically up to 10% of the loan per year.

Table 2: How voluntary partial repayments can reduce lifetime mortgage costs

	Cost without voluntary repayments	Cost with voluntary repayments	Saving with voluntary repayments
10 years	£200,966	£163,121	£37,846
15 years	£284,895	£215,590	£69,305

Source: Equity Release Council analysis based on a loan of £100,000 at a rate of 7%

Lifetime mortgage rates have remained competitive

The lifetime mortgage market has not been alone in feeling the impact of higher interest rates. Data from Moneyfacts Group plc shows the uneven effect of rate rises has actually reduced the gap between lifetime and residential mortgage rates.

Ten years ago in 2013, the average lifetime mortgage rate was almost 3% higher than the average fixed rate residential mortgage. For most of 2022, the gap was more than 1.5% compared with the average two-year or five-year fixed rate mortgage.

Over summer 2023, this rate gap fell to less than 1% versus five-year products and less than 0.5% versus two-year products. While the trend reversed slightly during September 2023, lifetime mortgage rates have remained more competitive in relative terms than they were just a year ago.***

David Burrowes, chair of the Equity Release Council, said:

“The equity release market has shown a strong resolve to keep an important lifeline open to customers during a challenging period for the UK economy. People are taking smaller loans and a smaller percentage of their available equity. However, the stark outlook for people’s pension prospects means property wealth will remain a vital part of the equation to avoid a cost-of-retirement crisis.

“While mortgage pricing has jumped across the board, lifetime mortgage rates have weathered the storm better than some residential mortgages. The security and flexibility enshrined in Council standards include the ability to make voluntary partial repayments without the threat of their home being repossessed if repayments become unaffordable.

“Even before the current cycle of rising interest rates, many homeowners were facing the reality of carrying mortgage debt into later life. That is even more likely now, which is why we must double down on our work with industry and regulators to ensure all homeowners understand all their options and make the right informed choices.

“We are completely focused on ensuring that customers receive the right advice at the right time so they can make well-informed decisions, in line with the Consumer Duty. No-one should turn a blind eye to equity release as an option for their later life financial planning, and it’s important they work with Council members to weigh up its practical benefits against all potential alternatives.”

ENDS

Notes to Editors

* Equity Release Council analysis of data from the Bank of England

** Office for National Statistics, Pension wealth: wealth in Great Britain, January 2022

*** The Market Report sets out a number of design differences between lifetime and residential mortgages which are factors in the different pricing of these products. Additionally, the maximum LTV available to equity release customers is determined by applicants’ age, rather than the relationship between the property value and deposit size which is used for residential mortgages. The lifetime mortgage market offers lower maximum LTVs to customers than for residential mortgages, related to repayments being optional and interest otherwise rolling up over the duration of the loan.

About the Autumn 2023 Market Report

The Equity Release Market Report is designed and produced by Instinctif Partners on behalf of the Equity Release Council. It uses aggregated data supplied by all active provider members of the Council to create the most comprehensive view of consumer trends and product uptake across the equity release industry.

The latest edition was produced in Autumn 2023 using data from new plans taken out in the first half of 2023, alongside historic data and external sources as indicated. All figures quoted are aggregated for the whole market and do not represent the business of individual member firms.

About the Equity Release Council

The Equity Release Council is the representative trade body for the UK equity release sector with more than 750 member firms and 1,900 individuals registered, including providers, funders, regulated financial advisers, solicitors, surveyors and other professionals.

It leads a consumer-focused UK based equity release market by setting authoritative standards and safeguards for the trusted provision of advice and products. Since 1991, more than 650,000 homeowners have accessed £46bn of property wealth via Council members to support their finances.

The Council also works with government, voluntary and public sectors, and regulatory, consumer and professional bodies to inform and influence debate about the use of housing wealth in later life and retirement planning.

For more information:

Visit www.equityreleasecouncil.com

Email Instinctif Partners at [email protected]

Phone Libby Wallis and Andy Lane on +44 (0) 207 457 2020

Equity Release Council: Q2 2023 equity release market statistics

1. Summary

• The number of active customers in Q2 rose slightly to 17,028, up 2% from the previous quarter, despite remaining 29% down year-on-year.
• Total lending of £664m was down 5% from the previous quarter, making it the quietest since Q3 2016 (£571m) for lending.
• New customers increasingly opt for drawdown lifetime mortgages over lump sums compared with 12 months ago.
• At £59,294, the average first instalment from a new drawdown plan was 35% lower than a year ago (£90,646 in Q2 2022) and the smallest since Q1 2017
• April was the quietest month of Q2, with the number of new plans picking up in May and again in June as monthly activity reached its highest point of the year-to-date.

 David Burrowes, Chair of the Equity Release Council, comments: “Higher interest rates have inevitably had a significant impact on the demand for lifetime mortgages like other mortgages, but the gap between residential and lifetime mortgage rates has narrowed over the last year.¹ Equity release remains competitive and has lost none of the extra protections that have been added in recent years.

“Innovations in equity release can come into their own in a higher rate environment, with drawdowns allowing customers to take what they need in the short-term and make extra withdrawals in future if their circumstances change and interest rates fall. Optional repayments also give people freedom to keep their borrowing under control by limiting the effect of compound interest.

“The socio-economic factors for releasing equity remain. People are living longer, they are not saving enough for retirement and they want to help themselves and their loved ones to live more comfortable lives. We have seen steady growth in new customer activity in Q2, with June the busiest month of the year so far. While it is too early to call this as the start of the recovery, there is cause for cautious optimism and we remain confident in the strength of the market.

“Financial and legal advice remain vitally important to help customers understand their options. Equity release products are crucial in helping to meet current needs and avoid a later life lending drought, with higher interest rates and affordability tests making capital repayment or interest-only options harder for older borrowers to access.”

2.Key statistics for Q2 2023

Overall activity

• A total of 17,028 new and returning customers used equity release products between April and June 2023 to unlock wealth from their homes. All new customers can benefit from being able to make penalty free partial repayments in future to reduce the effect of compound interest, without any obligation to repay the loan plus interest until they pass away or move into long term care.
• The number of active customers this quarter was down 29% year-on-year from 23,910 in Q2 2022, although there was a slight increase (2%) from 16,691 in Q1 2023.
• A total of £664m was unlocked by new and returning customers between April and June. This represents a fall of 5% on the previous quarter (£699m) and makes Q2 2023 the quietest lending period by this measure since Q3 2016 when £572m was accessed.

Trends among new customers

• The number of new plans agreed for Q2 2023 was 6,682 down by 1% from 6,766 in the previous quarter and down 46% on an annual basis compared to Q2 2022 when 12,485 new plans were taken out.
• New customer numbers fell to 2,004 in April from 2,384 in March, before recovering in May and June to 2,117 and 2,462 respectively. The uptick towards the end of the quarter suggests a level of certainty returning to the market, despite wider mortgage rate trends.
• New customers were broadly split when it comes to product choice: 52% opted for drawdown lifetime mortgages, taking an initial withdrawal up-front with more held in reserve for future use, while 48% of customers opted for a single lump sum. One year ago in Q2 2022, the equivalent split was 45% drawdown and 55% lump sum.
• The higher interest rate environment, coupled with lower maximum product loan-to-values (LTV) available, has seen customers reduce the amount they borrow. At £59,294, the average first withdrawal from a new drawdown plan represents a 35% decrease year-on-year from £90,646 in Q2 2022 and is the smallest amount seen since Q1 2017. This is despite UK house prices having risen by a third (33%) since March 2017.²
• Having reduced their total loan sizes by 21% over the last year from £137,480 to £108,645 over the last year, new drawdown customers are now taking 55% of this sum up-front and saving the rest for future use, compared with taking 65% up-front in Q2 2022.
• The average size of a new lump sum lifetime mortgage reduced by 29% year-on-year, with customers taking £94,266 between April and June compared to £132,331 a year earlier. This is the lowest amount since Q2 2019 (£93,712).

Trends among returning customers

• With interest rates fixed or capped at the point of withdrawal for products which meet Equity Release Council standards, the number of drawdown customers making new withdrawals from existing loans rose marginally by 1% in Q2 2023 compared to Q1 2023.
• However, the number of returning drawdown customers fell by 16% compared with Q2 2022, from 9,305 to 7,817.
• Returning customers reduced their borrowing in Q2 compared to the previous quarter with the average returning drawdown customer taking £12,468 from their agreed reserves. This was 7% less than Q1 2023, and 8% less than in Q2 2022 when the average drawdown was £13,506.
• The number of further advances (loan extensions) agreed on existing plans increased on the previous quarter, up 15% from 2,193 in Q1 2023 to 2,529 in Q2 2023. This is also a 19% rise compared to a year ago. This may be a sign of historic customers needing more funds in the current climate and finding their available equity has grown following recent house price gains.

Details of equity release products and pricing for Q2 are available via the Spring 2023 Market Report

3.Market data

Graph 1: Equity release customers numbers, by type of customer, Q1 2018 to Q2 2023 

Graph 2: Number of new equity release plans agreed per month, April 2020 to June 2023  

Source: Equity Release Council  

4.About the data

The Equity Release Council’s market statistics are compiled from member activity, including all national providers in the equity release market. This latest edition was produced in July 2023 using data from customer activity during the second quarter of the year (April to June). All figures quoted are aggregated for the whole market and do not represent the business of individual member firms.

Equity release products are available to homeowners aged 55+, enabling them to release money from the value of their home following a regulated process of financial advice and independent legal advice to determine whether this is suitable for their individual circumstances and long-term needs. Funds released are typically used for a range of purposes including providing additional retirement income, funding one-off expenses and lifestyle purchases, consolidating debts, meeting homecare costs and gifting a ‘living inheritance’ to family or friends.

For a comprehensive list of members, please visit the Council’s online member directory.

¹ Moneyfacts UK Mortgage Trends Treasury Report shows the average 2 year-fixed rate across all LTVs rose from 2.86% in April 2022 to 5.35% in April 2023 (+2.49), while the average 5-year fixed rate rose from 3.01% to 5.05% (+2.04). Over the same period, Equity Release Council analysis of Moneyfacts data shows the average equity release rate rose from 4.75% to 6.20% (+1.45).

² Office for National Statistics, UK House Price Index, May 2023, showing a 30% increase in average UK house prices from £215,236 in March 2017 to £286,000 in May 2023

5. About the Equity Release Council

The Equity Release Council is the representative trade body for the UK equity release sector with more than 750 member firms and 1,900 individuals registered, including providers, funders, regulated financial advisers, solicitors, surveyors and other professionals. It leads a consumer-focused UK based equity release market by setting authoritative standards and safeguards for the trusted provision of advice and products. Since 1991, more than 650,000 homeowners have accessed £46bn of property wealth via Council members to support their finances. The Council also works with government, voluntary and public sectors, and regulatory, consumer and professional bodies to inform and influence debate about the use of housing wealth in later life and retirement planning.

For more information:

Visit www.equityreleasecouncil.com

Email Instinctif Partners at [email protected]

Phone Jamie Till and Libby Wallis on +44 (0) 207 457 2020

Equity release activity dips as market adjusts to higher interest rate environment

Summary

• The number of new and returning equity release customers active between January and March this year dipped to 16,691, down 19% from 20,597 in Q4 2022 and down 29% from 23,395 a year earlier.
• Total lending of £699m made Q1 2023 the quietest by this measure since Q2 2020.
• New customers reduced their loan sizes in Q1 with the average first release from a new drawdown lifetime mortgage down 34% year-on-year to £61,785, the smallest seen in almost six years.
• February was the quietest month of Q1 2023, with the number of new plans picking up in March, as product pricing continued to recover from its peak in November 2022.

David Burrowes, Chair of the Equity Release Council, said:

“People have had to adjust to the realities of a higher interest-rate environment in many aspects of their personal finances.

“These figures show the equity release market has been no exception, although there are early signs, with decreasing rates and returning appetite, that a recovery is underway.

“Suitability and timing are everything when it comes to deciding to release equity. For some, it has made sense to continue with their plans.

“Other would-be customers have evidently been biding their time to see what interest rates do next.

“Homeowners with a present need have proceeded cautiously with average loan sizes at their lowest since 2017 in some cases, despite a 30% rise in house prices during that time.

“Anyone who unlocks money from their homes can do so safe in the knowledge that recent production innovations can work in their favour by giving them options to keep costs under control.

“Every product that meets Council standards allows people to make penalty-free partial loan repayments, reducing the build-up of interest.

“In addition, almost every product now offers early repayment charges that reduce to zero, making switching plans more practical in future if interest rates fall.

“Seeking advice from a Council member is essential to weigh up short and long-term considerations so that customers understand all their options and alternatives when making a plan.”

TO DOWNLOAD THE REPORT IN FULL CLICK HERE

• Equity release customers made 190,374 penalty-free repayments in 2022, up 48% from 2021
• Partial repayments will save customers £116m in future by reducing compound interest
• The Council’s analysis shows the average single pensioner could support a moderate lifestyle for 12 years by using equity release to boost their retirement income
• Product availability and pricing gradually improving after the economic shocks of late 2022
• Download the full Spring market report here.

The number of voluntary penalty-free partial repayments made by equity release customers grew by 48% last year, according to the Equity Release Council’s Spring market report.

More than 90,000 equity release customers reduced their loans by £102m in 2022 by making 190,374 partial repayments throughout the year, 48% more than were made in 2021.

By reducing their loans in this way, these customers stand to save a further £116m in future interest costs over the next 20 years.

Equity release allows older homeowners to access the wealth in their homes without having to repay the loan plus interest until they pass away or move into long-term care.

Making voluntary penalty-free part repayments was made a compulsory feature for all products that meet Equity Release Council standards from 28 March last year.

It means customers can choose to make repayments while they are still alive, reducing their interest costs and preserving more of their property wealth for future use or to pass on as an inheritance.

Raising later life living standards

The Market Report shows how homeowners are managing to improve their living standards in later life by drawing on property wealth to boost their existing income.

The Council’s analysis² shows the average single pensioner’s income falls just short of what is needed to support a minimum standard of living, as defined by the Pensions and Lifetime Savings Association’s Retirement Living Standards.

However, by boosting their income via equity release, they could afford a moderate lifestyle for 12 years or five years of living in comfort.

Similarly, the average pensioner couple could fund 18 years of moderate living or five years of living in comfort by topping up their income with the average equity release plan.

Product range recovering

The Market Report shows equity release activity reached record levels in H2 2022, despite the after-effects of the mini-Budget in September prompting a slowdown in Q4.

Since then, product pricing has fallen gradually over the last five months to an average of 6.23% at the start of April 2023, with advertised rates as low as 5.52%.

Product numbers have edged back towards 200, although maximum loan-to-values (LTVs) have been tightened from 47.0% in August 2022 to 38.7% in April 2023³.

David Burrowes, Chair of the Equity Release Council, said:

“Modern equity release is an incredibly versatile product. People can choose whether they want to make repayments without fear of losing their homes, and since this feature was embedded into Equity Release Council standards, we have seen people’s usage grow and their interest savings add up. By making modest repayments when they can afford to, customers can benefit from their property wealth in the here-and-now while reducing their overall borrowing costs by tens of thousands of pounds.

“A nation where so many pensioners struggle to afford a moderate standard of living simply cannot ignore the potential for property to help bridge the gap. Equity release could make a decade of difference or more to someone whose pension income might otherwise only cover a basic lifestyle.

“The option of turning property wealth into pounds in their pocket has never been more important for consumers and our ageing society. As the market recovers from the economic shocks of late 2022, it is vital that people consider the role of their homes in covering the costs of later life.”

Click here to read the report in full

New equity release customers will be able to mitigate the costs of borrowing in later life through a new product safeguard announced today by the Equity Release Council (the Council), the representative industry body.

From 28 March 2022, all customers taking out lifetime mortgages that meet Council standards will be guaranteed the right to make penalty free partial repayments of their loans.

It means new customers can not only reduce their borrowing, but offset the interest, without making any ongoing commitment to further repayments. The fifth product standard is being introduced to mark the 30th anniversary of consumer protections first established by the Council’s predecessor Safe Home Income Plans.

The Council is marking the occasion with the publication of a report, supported by Standard Life Home Finance, which explores the sector’s progress and evolution in the past three decades and sets out priorities for the year ahead.

Since 1991, more than 592,000 new equity release plans backed by Council standards have helped homeowners aged 55+ to access £38.7bn of property wealth to support their finances.

2021 saw the sector return to growth for the first time in three years with over 76,000 new and returning customers making use of equity release.

The industry and public figures featured in the anniversary report include Sir Hector Sants, Chair of the Money and Pensions Service; John Glen MP, Economic Secretary to the Treasury; Clive Betts MP, Chair of the House of Commons Levelling Up, Housing and Communities Committee; Rt Hon Damian Green MP, former First Secretary and current Chair of the All Party Parliamentary Group (APPG) on Longevity and Co-Chair of the APPG on Social Care; and Baroness Sally Greengross OBE, Chief Executive of the International Longevity Centre – UK and President of the Pensions Policy Institute.

In addition to the tenth edition of its standards, including the fifth product safeguard, the Council has also confirmed a number of planned initiatives for 2022.

These include establishing a Tech Forum and Legal Competency Framework to support practitioners. A series of member working groups will continue work to improve existing customer communications and review the presentation of information relating to fees and charges.

David Burrowes, Chairman of the Equity Release Council, comments: “Updating our standards to lock down the ability to make partial repayments on lifetime mortgages – an innovative feature that has become increasingly common in recent years – provides flexibility for consumers and ensures the sector continues to evolve to meet changing demographic needs.

“As recent years have reminded us, people’s circumstances can change and customers who find they can use earnings, savings or an inheritance to reduce their borrowing in later life will be able to do so without incurring early repayment charges.

“Introducing a fifth product standard is the latest milestone in a decades-long commitment to robust consumer safeguards. The ongoing process that started in 1991 has been key to building trust in equity release, which has become a multi-purpose product that is adaptable and adept in a variety of scenarios and contexts.

“The safeguards and standards the Council has worked to develop and uphold over the years will stand consumers in good stead as socio-economic factors give rise to a further increase in demand to access property wealth. The priorities we have set out today will help to further evolve the sector and provide good later life consumer outcomes.”

Kay Westgarth, Head of Sales at Standard Life Home Finance, comments: “Standard Life Home Finance is a relatively new entrant to this market, however we are building on the great work that the industry has done to raise standards, educate consumers and ensure it is possible for over-55s to safely access their housing equity. As an industry, we have come a long way in a relatively short period of time but there is always room for improvement.

“The introduction of a fifth standard is to be celebrated as it will allow customers to better manage their borrowing and ensure that products work for their individual circumstances. It is this type of innovation that will ensure we see another thirty years of growth and change for this vibrant market.”

The Council has published its latest market data for Q2 2021.

To download the report in full click here.

Highlights of the report include:

• Equity release activity nears pre-pandemic levels in Q2 as existing customers return.
• 20,352 new and returning customers accessed property wealth between April and June, edging closer to pre-pandemic activity levels as consumer confidence holds.
• Drawdown lifetime mortgages remained the most common type of new plan agreed (55%), although more customers took out lump sums in June before the £500,000 Stamp Duty holiday ended.
• Returning drawdown figures picked up the most during Q2 after many existing customers paused withdrawals in 2020.
• Over-55 homeowners unlocked £1.17bn of property wealth in total during Q2 2021, up 2% from Q1 (£1.14bn) and up 67% (£698m) since a subdued Q2 last year during the first Covid-19 lockdown.

David Burrowes, Chairman of the Equity Release Council, comments:

“Judging by these latest figures, the equity release market is showing signs of stability and durability as the option to access property wealth opens doors for thousands of people to pursue their financial goals.
“We were accustomed to more than 20,000 new or returning customers releasing equity each quarter in the two years before Covid-19 struck. We’re now seeing activity levels steadily returning back to that status quo, with some existing customers returning to make withdrawals that were put on hold last year. The gradual recovery suggests people are carefully weighing up their circumstances and long-term needs, helped by specialist financial and legal advice, with speculation about a spike of activity during the pandemic so far proving unfounded.
“The steady recovery has been helped by confidence in the wider property market, where house price gains over the last year have given many homeowners more equity at their disposal. Equity release has become a socially important means for one generation to help another, as well as meeting later life financial needs. June’s Stamp Duty deadline will have prompted some older homeowners to pass on a ‘living inheritance’ so that younger family members can climb the property ladder.”