Thinking about releasing equity from your home?

The rise and rise of equity release.

The equity release market continues to grow. According to Q2 figures from the Equity Release Council, equity release lending between April and June increased by 12% compared with Q1 of 2018 and by 39% year-on-year from Q2 2017.

David Forsdyke, Equity Release Development Manager at Access Equity Release, says the data highlights the increased awareness of the benefits that equity release can provide for home owners aged 55 and over.

“The appetite to consider equity release as a financial solution in later life shows no sign of abating. Increasing numbers of people recognise that equity release is very different today than it used to be. Consumers must take expert financial advice from qualified specialists if they want to release equity. The adviser will only recommend equity release if it suitable for the client. Equity release today is regulated by the Financial Conduct Authority."

"As so many people find that they are asset rich but cash poor in retirement, releasing some of the equity in their property is a valid consideration. Another popular reason is to help younger generations onto the property ladder.” 

As a result of the increased demand for equity release, total lending in the first half of 2018 reached £1.84bn. Compared to H1 of 2017, that is a 32% increase. The total number of equity release customers has risen by 28% over the same period, from 16,805 to 38,912.

Lifetime Mortgages continue to be the most popular form of equity release.

More than three in five (62%) of new customers chose drawdown lifetime mortgages, which allows borrowers to access equity in instalments, withdrawing further funds as and when they are needed. This can limit the interest owed.

Nearly two in five (38%) opted for a lump sum mortgage.

Home reversion plans are far less common and made up fewer than 1% of new plans taken out in Q2 2018. However, lending in this sector of the market exceeded £1m for the first time in two years, since Q2 2016. 

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

“Property wealth has an important role to play as part of the solution to many pressing socio-economic issues, from boosting retirement incomes to funding social care and easing intergenerational pressures by helping people to pass on a ‘living inheritance’.

“Consumers are releasing money from their homes for a variety of reasons, and features like downsizing protection and repayment options mean today’s equity release product range is designed to evolve as people age and circumstances change.

“Growing choice and flexibility has propelled equity release into the mainstream consciousness, and it is crucial that consumers are encouraged to weigh up all the choices available to them.”

Figures from Equity Release Council Q2 2018

Siobhan Lipnicki