Equity release set to hit £4bn in 2021

The Equity Release Council have released its Q3 market statistics which show that homeowners are, for the first time, set to access over £4bn of property wealth via equity release. 

2021 has seen £3.46bn released year to date, with Q3 lending up nearly one-fifth on 2020. The equity release market has seen lending exceed £1bn every quarter for the last four quarters for the first time.

The demand is being driven by the gradual easing of restrictions and the end of successive lockdowns, and property price inflation. The average new lump sum lifetime mortgage customer had a property worth £406,000 in H1 2021, compared with £346,000 in H1 2020.

Competition is driving the availability of more product options, which have more than doubled since July 2021. Drawdown lifetime mortgages remained the most popular product category, attracting 57% of new customers in Q3 2021 compared with 55% in Q2, while 47% chose a lump sum lifetime mortgage.

Fund from equity release are often used to support family members. Savills recently reported that parents will give or lend a record £10bn to help children get on the property ladder. Around half of first time buyers, around 169,000, will use money from parents to help them with deposits.

Savills estimate that parents will lend £9.8bn to their children this year, beating last year’s record of £6.1bn.

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

“The equity release market has been a steady ship in turbulent times with activity broadly stable now for four successive quarters. The inevitable pandemic slowdown has been followed by the gradual return of confidence, helped by the robust performance of the wider property market.

“While annual activity has hovered close to £4bn since 2018, the market hasn’t stood still and the available product range has more than doubled since then. Homeowners in need of extra funds for later life are increasingly look to equity release as a positive step, in the right circumstances, to benefit from a source of wealth they have built up over many decades.

“The Stamp Duty holiday inevitably impacted consumer behaviour over the summer and into autumn, with average loan sizes and drawdown activity fluctuating. Looking ahead, the ability to gift money to family members and share the proceeds of long-term house price growth is likely to remain an attractive option. Equity release can both help to close the financial gap between generations and allow people in later life to experience and enjoy the benefits of providing a living inheritance.”

Claire Singleton, CEO of Legal & General Home Finance:

“The market is set to provide older homeowners with access to more than £4 billion of property wealth for the first time by the end of this year, largely due to the stamp duty holiday and the effects of the pandemic property boom.

“Supported by low interest rates, and an expanding market, lifetime mortgage products have grown in popularity as homeowners look to access additional wealth, either for their own retirement needs or to support loved ones. Flexibility and an increasing range of products, including the option to pay interest, mean attitudes towards equity release are changing. With property continuing to rise in value, many people have seen their home emerge as their most significant asset, moving lifetime mortgages away from a specialist product to an essential element of at-retirement planning.”

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