Equity release loans hits record £1.7bn

Homeowners took out 13,452 new equity release plans in the third quarter with total lending hitting a record £1.7 billion, according to the Equity Release Council’s latest statistics.

A record number of homeowners aged over 55 have turned to equity release to support their cash-strapped families through the cost of living crisis.

According to the Equity Release Council, 13,452 plans were taken out by older homeowners between July and September – an increase of 8% from the previous three months. Total lending to new and returning customers grew by 49% compared to last year, the trade body. This also included 9,648 returning customers and 2,419 further agreed advances, making a total of 25,519 customers active between July and September.

New customer numbers lifted by 34% from a year ago, with lending to new and returning customers growing by 49% over the same timeframe.

Equity Release Council chair David Burrowes said “The summer months have seen the equity release market resume its pre-pandemic growth trajectory, with extra protections having been added in the intervening years so all new customers can make voluntary repayments when they can afford to and reduce their overall costs.”

“Equity release is not an overnight purchase, and the desire to secure lower interest rates before anticipated rises is likely to have influenced customers’ timings as they completed deals from earlier in the year.””

Key, Chief Executive Will Hale said  “Today’s figures from the Equity Release Council highlight a growing and robust sector. However, as with other parts of the mortgage market, recent political uncertainty has impacted rates and product availability which means that the final three months of the year will likely look quite different to the first three quarters.”

“While the appointment of the new Prime Minister looks set to steady the markets, there remain challenges ahead and customers considering borrowing in or into retirement must seek specialist advice and consider all their options.”

Legal & General Home Finance Chief Executive Craig Brown said “Demand for equity release has returned to pre-pandemic levels, as the nation looks to the value of their homes to support strategic later life planning needs.”

“Although there may be a slowdown in house price growth, property prices are still at an all-time high and many homeowners have built up a significant amount of equity in their homes and see their home as a retirement asset.”

“As we look to the next three months, we expect that gifting will remain a popular use of equity release. We could also see customers looking to access property wealth to finance energy efficiency improvements to make homes more sustainable for the long term. As ever though, it is not a quick fix, but an important product to be considered as part of a wider approach to retirement planning.”