Popularity of Equity Release Continues to Soar
Industry News

Popularity of Equity Release Continues to Soar

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Carl Shave Carl Shave | May 13, 2017


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Once seen as a funding method of last resort, now more and more homeowners are choosing to use equity release to access the capital tied up in their home. The latest figures from the Equity Release Council show there were 8,351 new equity release plans agreed in the first quarter of 2017, representing a 61 percent rise when compared to the same time last year. The equity release market is typically at its busiest in the final quarter of the year. Figures for 2016 illustrate this seasonality, with 5,176 equity release plans agreed in Q1 2016, compared to 8,303 in Q4 2016. However, Q1 2017 bucked that trend, becoming the first time since 2003 when there was more activity in the equity release market at the start of the year than at the end of the year before. The fastest annual rate of growth the industry has seen The figures for the year so far show record customer numbers and the highest level of lending. That has led to an annual rate of growth of 61 percent year-on-year, representing the fastest rate of growth the sector has ever seen. According to Nigel Waterson, chairman of the Equity Release Council: “Much of this activity is due to increasing supply as well as growing demand. The past year has continued the trend of new providers, products and flexibilities coming onto the market. “Regulatory changes, such as the common-sense relaxation of affordability rules for interest-served products, have also provided more scope for the sector to meet burgeoning demand.” The popularity of lifetime mortgages Lifetime mortgages are the most popular equity release product. In this type of plan, the interest on the amount the homeowner has released rolls up over time. When the plan finishes, either when the homeowner moves, goes into long-term care or dies, the loan plus the interest is repaid to the scheme provider. In 2016, the number of lifetime mortgage customers grew by 22 percent, with a total of 27,534 new plans agreed. Remarkably, that made lifetime mortgages the fastest growing segment of the mortgage market in terms of customer numbers. Compare this to 2006, where one lifetime mortgage was agreed for every 27 home mover mortgages and you soon see just how much the equity release market has grown. What explains the surge? Older homeowners are becoming increasingly aware that their housing wealth does not have to be locked into their property. More and more are deciding to release this wealth to re-invest in their homes, help their younger family members and provide a living inheritance. With continued innovation among lenders and ever expanding product ranges, it’s no surprise equity release is proving so attractive and it looks to be a sector that will continue to soar. To find out more about your equity release options or for a confidential, no-obligation discussion of your circumstances, please get in touch with our team.