A record £136 of housing wealth was unlocked every second between October and December 2018 as the equity release market continued to boom, latest figures have shown.
The Equity Release Council, which represents 95 per cent of the equity release market, has released its fourth quarter lending figures showing older homeowners unlocked £3.94bn of property wealth in 2018, up almost a third (29 per cent) year-on-year, with an unprecedented £1.08bn of housing wealth unlocked in the final quarter of 2018.
The market saw 46,000 new customers in 2018, an increase of 25 per cent on 2017, with 12,891 new equity release plans agreed in the fourth quarter of 2018.
The number of returning drawdown customers was also up 27 per cent, at 32,750 in 2018.
However, the number of further advance customers dropped 6 per cent to 3,644.
David Burrowes, chairman of the Equity Release Council, said older homeowners were warming to the idea of accessing property wealth alongside their pensions.
He said: "Industry, regulators and government must continue to explore how we can help generations of retirees, both today and in the future, to adopt a more rounded approach to later life planning.
"With a growing choice of products and features on offer, the market is maturing and adapting to offer a new level of flexibility to suit a range of financial needs and ambitions, from funding care costs to helping children to buy their first home.
"Equity release now plays a pivotal social role and the Equity Release Council will continue to ensure that products are underpinned by robust consumer safeguards."
As of August 2018, 139 product options were available to consumers, more than double the 58 seen two years ago and up from 24 in 2007, according to the Equity Release Council.
However, while the customer base has grown to new levels, the average amount withdrawn by homeowners has remained steady, the data shows.
During the fourth quarter of last year, the average first instalment of a drawdown lifetime mortgage was £63,530, up slightly from £62,359 a year earlier.
The average new lump sum lifetime mortgage in the fourth quarter was £96,515, down from £101,913 in the fourth quarter of 2017.
Drawdown products were chosen by 65 per cent of new customers.
Nicholas Georgiou, mortgage broker at Westgate Mortgage Services, said equity release made up 70 per cent of his business and he expects the market to keep growing.
He said: "Lenders are offering more flexible products, but advisers still need to understand the market well.
"I have a client who took out an equity release product in 2014 and is deeply unhappy about the early redemption charges.
"Products are more innovative now, of course. But if a client has sufficient funds and doesn’t mind making monthly repayments, I would always advise going for a residential mortgage first."
Steve Ellis, chief executive of Legal & General Home Finance, said: "The decline of final salary pension schemes, living longer in retirement and the growth in property wealth amongst the over-55s has certainly contributed to the rise of retirement lending, but over the last year we’ve seen big changes to this market.
"Lenders such as ourselves have stepped up to support interest-only customers and deliver new solutions.
"However, with our industry within reach of the £4bn milestone there is more we can do for retirement lending to reach its full potential.
"The challenge over the next year will be matching demand with distribution. That means supporting more mortgage advisers to enter the market and talk to their clients about the possibilities that later life borrowing offers."
Dippy Singh is a freelance reporter for FTAdviser
