Equity release lending increased by £68.3m in the third quarter of this year, compared with the previous quarter in the biggest quarterly rise since 2004, according to the latest Equity Release Council figures.
The trade body said this is a result of more homeowners over the age of 55 making use of their housing wealth to support their finances in later life. The third quarter also saw the fastest growth this year in terms of lending and the number of plans agreed.
Across the third quarter, lending rose 21 per cent year-on-year, compared with 18 per cent annual growth in the second quarter and 3 per cent in the first quarter to reach £452.6m. In doing so it set a new lending record for a second successive quarter, equivalent to £5m of housing wealth being accessed every day.
A total of 6,049 plans were taken out in Q3, representing a 12 per cent increase on the second quarter and the first time this measure has exceeded 6,000 since 2008.
The volume of new plans was up nine per cent year-on-year, compared with three per cent annual growth in the second quarter and two per cent in the first quarter.
A new high was reached for lending via drawdown lifetime mortgages, rising 18 per cent year-on-year from £231.6m in the second quarter 2015 to £266.8m in the third.
The value of lending via lump sum lifetime mortgages also increased by 18 per cent year-on-year in the third quarter 2015 to reach £183.5m, the largest figure since the fourth quarter 2006, £204.7m.
Lending via home reversions almost tripled from £632,647 in Q2 2015 to £2.37m in Q3 2015 accounting for 1 per cent of the market.
Nigel Waterson, chairman of the Equity Release Council said that appetite among over-55 homeowners for tapping into their housing wealth continues to grow.
“The months ahead will see important discussions with regulators and government about how to build on this foundation, so that where there is a need, more people can make use of what is often their biggest source of retirement wealth.
“New arrivals in the sector and additions to the product range are helping more people to find options that suit their needs and circumstances. The sector will continue to innovate, as well as maintaining the council’s standards of financial advice and consumer protections so customers continue to be fully informed and supported in their retirement planning.”
Steve Wilkie, managing director at Responsible Equity Release, commented: “A steady stream of homeowners in retirement are using equity release to pay off their mortgages, because their lenders are reluctant to remortgage even small debts.
“The cold hard truth is that without the option of equity release, many pensioners face the prospect of having to sell their property to clear their outstanding mortgage balance, even if the debt is only in the tens of thousands of pounds.”
Dean Mirfin, technical director at Key Retirement, said that the figures show that the sustained growth seen throughout 2015 shows little sign of wavering as we enter the final quarter of the year.
“With both HM Treasury and the regulator now throwing the spotlight on ways that consumers can better access and utilise wealth locked up in property, we expect this growth to continue in to 2016 and beyond.”
ruth.gillbe@ft.com
