Credit, Collections & Insolvency News
The Equity Release Council’s latest quarterly market report for Q3 2024 shows that new plans agreed and total lending rose for a second successive quarter for the first time in two years, as the market’s gradual recovery continues.
Homeowners over the age of 55 withdrew £615m of property wealth from their homes between July and September, a 6% increase from Q2 2024.
With the number of new plans agreed rising by 2% to 5,370 over the same period, Q3 became the first time since before the mini-Budget of Autumn 2022 when the equity release market has seen two successive quarters of growth.
Average loan sizes increased modestly, with new lump sum lifetime mortgage customers taking £111,618 while those taking drawdown lifetime mortgages took £69,952 upfront and reserved another £49,747 for future use.
The 8% quarterly rise in existing customers taking further advances to extend their loans was a sign of customers having sufficient equity remaining in their homes, helped by UK house prices having risen year-on-year for six months in a row, since February 2024, according to the latest UK House Price Index.
Commenting on the data, David Burrowes, chair of the Equity Release Council, said “Returning growth may have been modest to date, but it’s particularly encouraging to see the trend continue during the transition period sandwiched between the arrival of a new Government in early July and its first Budget statement later this month.
“Behind these improving numbers are reports from both advisers and providers alike that consumer confidence is steadily returning. That may not translate into an uninterrupted upwards trajectory from here, but we know there are many households who have decided that releasing equity is right for them and are now focused on ensuring the timing is also right.
“Housing wealth continues to play a multi-purpose role in people’s financial plans, with mortgage refinancing, gifting and home improvements all common motivations for customers at the moment, alongside topping up retirement income.”
“New customers who need to press ahead have the use of flexible repayment options to manage their borrowing, while people with less pressing needs are watching and waiting to see the future path of interest rates. To further support homeowners borrowing ambitions, product development teams have been busy adding to the flexible features and criteria available for loan-to-values, interest payments and early repayment charges.
As we head towards the end of the year, we anticipate that we will continue to see steady growth if interest rates remain stable and consumer confidence responds positively to the forthcoming Budget.”
Ben Waugh, MD of more2life aid “It’s really positive to see the second straight quarter of growth for both the total plans agreed and the total lending in the report for Q3 2024 from the Equity Release Council. The sector has been through a challenging time, so it’s encouraging to see these products once again playing a fuller role for later life borrowers.
“One of the key drivers in this increased activity in my opinion is the level of product innovation. There is much more creativity in the product design from providers, incorporating features like offering a reduced interest rate in exchange for committing to making payments for a fixed term. There is a greater variety in the early repayment charges too, making the transition from mainstream mortgages to specialist later life products more attractive.
“However, there remains huge untapped potential. The number of borrowers for whom these products are a useful option is only going to grow, so it’s crucial that greater numbers of mainstream mortgage brokers add later life products to their service range. Clients enjoy access to products that meet their needs, while advisers not only meet their Consumer Duty requirements but are also properly remunerated for their work. Ultimately everyone benefits.”
| Average loan sizes | Quarterly change | Annual change | ||
| New lump sum | £111,618 | +1% | +18% | |
| Lump sum further advance* | £28,570 | +1% | +5% | |
| New initial drawdown | £69,952 | +7% | +11% | |
| New drawdown reserve facility | £49,747 | +9% | +10% | |
| Returning drawdown | £12,768 | +6% | +8% | |
| DD initial further advance* | £25,759 | -3% | +4% | |
| DD further advance reserve facility* | £10,030 | 21% | -8% | |
| Product choice among new customers | Drawdown: 53% | Lump sum: 47% | ||
