The buoyant equity release sector saw record annual growth in new customers and total lending in the first quarter of 2017, according to the Equity Release Council which accounts for 95 per cent of all equity release lending in the UK.
The total value of equity release lending in Q1 reached £697m, up by 77 per cent from £394m in Q1 2016.
This follows a record breaking 2016 in which annual lending reached £2.15bn.
The figures are the latest sign of burgeoning supply and demand for products allowing older homeowners to unlock their housing wealth in later life in order to boost their retirement finances.
A total of 8,351 new equity release plans were agreed in the first quarter of 2017. This was 61 per cent higher than the 5,175 recorded in the first quarter of 2016.
The year-on-year growth is the highest seen in any quarter since quarterly records began in 2002.
This is also the first time since 2003 that the equity release sector has been busier in the first quarter of a new year than the final quarter of the previous year.
Between Q4 2015 and Q1 2016, the number of new equity release plans agreed fell 19 per cent while the total value of lending fell 11 per cent. In contrast, the number of new plans increased 1 per cent (from 8,303) from Q4 2016 to Q1 2017 while the total value of lending increased 4 per cent (from £670m).
Comparing back over two years to Q1 2015 – the last quarter before the ‘pension freedoms’ were introduced – the number of new plans agreed in Q1 2017 was 71 per cent higher (having been 4,880) while the total amount of Q1 lending has more than doubled from £326m (an increase of 113%).
In the wake of the pension reforms that have given consumers greater access to their retirement savings and abolished the compulsory purchase of annuities, the figures suggest older homeowners are increasingly looking to their housing wealth as one of a range of assets to use as part of their retirement financial planning.
In terms of product split, drawdown lifetime mortgages remain the most popular choice of new plan among equity release customers. However, lump sum lifetime mortgages saw the highest rate of annual growth in both new customer numbers and the total value of lending in Q1 2017.
Nigel Waterson, chairman of the Equity Release Council, said much of this activity is due to increasing supply as well as growing demand.
"The past year has continued the trend of new providers, products and flexibilities coming onto the market. Regulatory changes, such as the common-sense relaxation of affordability rules for interest-served products, have also provided more scope for the sector to meet burgeoning demand.
“Equity release can offer a valuable solution to help meet the many and varied financial demands people face in later life, backed by a host of product safeguards along with financial and legal advice. Consumers continue to find equally varied uses for their housing wealth, including paying off existing debt such as interest-only mortgages, helping younger generations onto the housing ladder, investing in home improvements and improving their lifestyles in retirement.”
Technical director Dean Mirfin of specialist IFA Key Retirement added: "Our first quarter results track those of the Equity Release Council. We find there is increase demand across all areas for these products."
