The number of consumers releasing equity from their properties increased by 6 per cent in the first six months of the year, the latest data has shown, as the market became more flexible and the number of products boomed.
The Equity Release Council’s Autumn Report, published today (September 24), showed 41,263 consumers took out an equity release plan in the six months to June — 6 per cent up on the same period in 2018 but 6 per cent less than the second half of last year.
Although still growing year-on-year, the rate of growth has slowed, with the report showing equity release activity was up 32 per cent when compared to two years ago.
Mark Gregory, founder and chief executive of Equity Release Supermarket, said: “The growth we have seen in the equity release market in recent years has clearly not continued in the first half of 2019.
“The reasons for this are complex and include economic uncertainty impacting regional house prices – particularly in London.”
The report also found total lending was flat compared to last year — £1.85bn in the first half of 2019 compared to £1.86bn the year before — and the council put this down to “the maturity of the market”.
According to the report, the biggest change in the equity release market over the past year was the level of flexibility and product choice alongside a reduction in the cost of equity release products.
The number of total product options on the market increased 128 per cent to 287 from August 2018 to August 2019.
Product options offering the ability to make regular interest payments increased to 81, quadrupling year-on-year, while those offering inheritance guarantees saw an 88 per cent increase over the same time period.
There was also a rise in product options available on sheltered or age restricted accommodation (269 per cent), while the range of options offering downsizing protection doubled.
This feature allows customers to downsize and repay their loan without incurring an early repayment charge.
The average cost of releasing equity from property also dropped to a record low of 4.91 per cent — the first time the rate had fallen below 5 per cent — while more than a fifth of products (21 per cent) were priced at 4 per cent or below.
David Burrowes, chairman of the Equity Release Council, said: “The equity release market is responding to consumer demand as it continues to evolve and grow.
“Increased product innovation and flexibility are helping to meet a wide range of financial and social needs, from providing extra retirement income to passing on wealth to younger generations.
“The market’s development has been driven by competition, reinforced by robust consumer protections and product safeguards.”
Steve Wilkie, managing director of lifetime mortgage experts Responsible Life, said the lifetime mortgage market had come of age in a “big way” this year, noting that rates had dipped into territory “never seen before” and customers were served “better than ever”.
He added: “It is almost impossible to imagine the industry will ever return to being a niche area of financial services that was very much seen as alternative rather than mainstream in its formative years.”