The equity release market has seen continuous growth for two quarters, marking a significant shift after two years of stagnation.
- Homeowners over the age of 55 have extracted £615 million from their property wealth between July and September, a 6% increase from the previous quarter.
- The number of new plans agreed rose by 2%, reflecting a notable recovery since the mini-Budget of Autumn 2022.
- Average loan sizes have increased, with substantial amounts released through both lump sum and drawdown lifetime mortgages.
- Growing consumer confidence and flexible product offerings are driving this market resurgence.
In the third quarter of 2024, the equity release market demonstrated marked resilience, recording growth for the second consecutive quarter following a two-year period of stagnation. This notable achievement saw homeowners aged over 55 withdraw £615 million from their property wealth, a 6% increase from the previous quarter, highlighting a progressive trend in homeowner engagement with equity release options.
New equity release plans also experienced a substantial rise, increasing by 2% to 5,370 plans. This increase is indicative of a positive rebound from the challenges faced post-mini-Budget of Autumn 2022, where the market had encountered significant hurdles.
The average loan sizes for equity release customers have shown a modest upward trajectory. Those opting for new lump sum lifetime mortgages drew an average of £111,618, while drawdown lifetime mortgages saw £69,952 withdrawn upfront, with an additional £49,747 reserved for future use. This increase underscores the growing reliance on property wealth as a strategic financial resource.
Existing customers accessed further advances with an 8% quarterly rise, supported by the favourable trend of rising house prices over the past six months. This trend reflects a broader confidence among existing homeowners to leverage their housing wealth more assertively.
David Burrowes, chair of the Equity Release Council, remarked on this momentum, expressing optimism regarding the role of housing wealth in financial planning. He emphasised the multifaceted motivations behind equity release, including refinancing, gifting, home improvements, and augmenting retirement income. Burrowes also highlighted the introduction of flexible repayment options, catering to both immediate and speculative financial needs, and pointed out the industry’s ongoing efforts in developing products with varied features such as flexible loan-to-values and early repayment options.
As we approach the end of the year, steady growth in the equity release market is anticipated to continue, contingent upon stable interest rates and consumer confidence.
