Mortgages  

Equity release sales hit five-year quarterly high

Equity release plans agreed in the third quarter of this year reached a total value of £284.1m making it the largest single quarter in sales terms since the equivalent period in 2008, according to figures from the Equity Release Council.

The total represents a 14 per cent rise compared to the third quarter of last year and a 15 per cent increase compared to the second quarter of 2013, the biggest single quarterly jump since the 30 per cent rise recorded between Q2 and Q3 2004, the data reveal.

The average amount released has also broken records with each customer now releasing £57,107, the highest figure since quarterly records began in 2002. This could be driven by the ever increasing cost of living, coupled with the dwindling saving pots of the over-55s, ERC speculates.

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Almost all equity release plans (97 per cent) are sold through IFAs, a figure which has consistently crept up since records began in 2003.

The number of equity release customers has increased with almost 14,000 over-55s having released equity from their homes in 2013 to date and nearly 5,000 new customers coming to the market in the last three months alone.

The 4,975 new customers in the third quarter of 2013 is the most seen in a single quarter in four years (5,198 in Q2 2009). This is up 7 per cent on the second quarter and represents a 4 per cent year-on-year change.

Equity release has been growing in prominence in recent months as reports continue to show that many people will be required to take a substantial drop in lifestyle due to having inadequate savings and traditional at-retirement products offering ever-lower rates.

However, earlier this week advisers condemned an advertisement run by Key Retirement Solutions in the Telegraph newspaper which appeared to encourage over-55s to consider equity release as a way of funding ‘splashing out’ on Christmas presents.

Nigel Waterson, chairman of the Equity Release Council said: “As our figures continue to leap up quarter-on-quarter, year-on-year – the equity release market is very much alive. It is encouraging to see significant increases in not only the number of over-55s making the most of their property wealth, but also the amount that each individual is able to release.

“The growing interest in the market is a sign that equity release has an increasingly important place to play in financial planning for later life, giving advisers a key option to assist their clients among the range of retirement products.

“With house prices rising month-on-month, but saving pots dwindling and the cost of living soaring, equity release can offer homeowners a way to take the stress out of retirement, whether it be to help with those outstanding debts or to just ensure you can enjoy your later years.”