Consumers released about £11m per day from properties in the third quarter of the year as the equity release market continued to grow, the latest data has shown.
Quarterly figures published by the Equity Release Council yesterday (October 28) showed consumers released a total of £990m from their homes in the three months to September — 8 per cent up on the previous quarter.
A total of 11,400 customers opted to release cash, 6 per cent more than in Q2 2019, and the Equity Release Council said the reasons ranged from supplementing pensions to paying off existing mortgages and other debt.
Chris Knight, chief executive of L&G Retail Retirement, said: “The latest market figures show that lifetime mortgages are no longer on the margin of retirement planning in the UK and have rightly taken their place as a core component of income provision among retirees.
“Gone are the days when pensions were the sole source of retirement income.”
Although Q3 was the market's most successful quarter of 2019 so far, both the value of total lending and the number of new equity release customers was down year-on-year by 3 and 5 per cent respectively.
This was because the second half of 2018 was a particularly successful time for the sector.
Despite the market growing by customer numbers the average amount withdrawn has remained stable this year.
In Q3 the average equity release plan was £63,200 — compared with £64,800 two years ago — while the average lump sum taken was £95,600, compared with a £100,400 average in the third quarter of 2017.
The equity release sector grew steadily over the past five years. In the third quarter of 2014, a mere 5,550 consumers opted for equity release — 55 per cent less than the 11,400 five years later.
Data from the ONS suggested this was a trend that was likely to continue if based on the number of people reaching retirement age.
Official demographic projections showed the number of people aged 55 and over will increase by nearly 23 per cent in the next 20 years while those aged 70 and above (the average age of an equity release customer) is expected to increase by 4m — or 44 per cent — over the same time period.
As to be expected, the total value of cash released from homes has increased alongside the number of consumers taking out equity release products.
The £990m released in Q3 2019 was up 163 per cent on Q3 2014, when there was £375m of total lending.
Sarah Drakard, IFA at Cruze Financial Solutions, said the rise of equity release could be down to the “effects of the credit crunch”.
She said people had interest-only mortgages, with hefty capital yet to pay, alongside meagre pension pots which would not suffice for retirement and therefore equity release was often the “only option” if consumers wanted to stay in their homes.