Total equity release lending passed £1bn in the first nine months of 2014, according to the latest figures from the Equity Release Council.
The £1.02bn total for the first three quarters of 2014 is more than the entire year’s lending totals for 2009 to 2012 and already 95 per cent of 2013’s total market value.
During the third quarter of the year total equity release lending totalled £375.5m, up 15 per cent on the previous quarter and reaching the largest amount in any single quarter since records began in 2002.
The number of new equity release customers also increased, with 5,565 over-55s releasing equity from their homes in the last three months alone.
This brings the number of new customers to 15,624 in the year to date, putting the industry on track to see 20,000 new customers in total by the end of the year.
The average value of equity release lending in the third quarter reached £67,467, which was up by 9 per cent since last quarter and 18 per cent since the third quarter of last year, driven by the need for additional funds in retirement and by the boost that increasing house prices has given to people’s available equity.
Lump sum and drawdown lifetime mortgages have also continued their upward climb, with increases for both in the third quarter.
The value of lending via lump sum products rose 16 per cent from the last quarter to £148.7m, while the value of drawdown lending rose by 15 per cent to £225.7m, demonstrating largely even growth across both product options.
Nigel Waterson, chairman of the Equity Release Council, said customer education was crucial to fulfil the market’s potential.
He said: “Input from regulators and the government is invaluable to this process and further collaborations will help extend the crucial role that equity release has to play in retirement planning.”
Geoff Charles, chief executive of equity release adviser Bower Retirement Services, said the market is developing quickly, with more products becoming available.
He said: “Booming customer volumes reflect a housing wealth source that is becoming more mainstream as it matures, and the market is currently on track for a record year.
“But there is still a knowledge gap with many customers, and quality advice is more important than ever to ensure that equity release plans are the right option for them to take.”
Alice Watson, product and communications manager at lifetime mortgages firm Stonehaven, said she expects to see further uplift as more people carrying residual mortgage debt through interest-only mortgages look to repay those debts over the coming years.
She said: “Locked out of traditional mortgage solutions, equity release can be the fix for many older homeowners who find themselves in this worrying situation.
“We also expect new pensions freedoms from April 2015 to boost the market as equity release becomes an even stronger part of the retirement income planning mix.”
peter.walker@ft.com
