The latest findings from the Equity Release Council indicate a positive shift in the market, observing growth over two consecutive quarters for the first time in two years.
- Homeowners over the age of 55 have significantly increased their property wealth withdrawals, reaching £615 million between July and September.
- New equity release plans have seen a 2% increase, with 5,370 new agreements made, depicting notable recovery from prior fiscal challenges.
- Average loan sizes have also risen modestly, with lump sum lifetime mortgage clients borrowing significant amounts.
- Increasing house prices are driving a higher number of existing customers to seek further advances, contributing to the market’s positive trend.
The Equity Release Council’s recent report unveils a favourable trend in the market, marking the first instance of growth over two consecutive quarters in two years. This development is a significant milestone, reflecting a resurgence in the market dynamics for equity release. Homeowners aged 55 and above have capitalised on this opportunity, extracting £615 million from their property wealth between July and September—a 6% increase from the preceding quarter.
The number of new equity release plans has risen by 2%, resulting in 5,370 new agreements. This marks a substantial improvement from the period preceding the mini-Budget of Autumn 2022, indicating a revitalisation in consumer engagement and confidence within the sector.
Simultaneously, average loan amounts have shown a modest uptick. New customers opting for lump sum lifetime mortgages are securing £111,618 on average, whereas those choosing drawdown lifetime mortgages are drawing £69,952 upfront, with an additional reserved amount of £49,747 for future use. This trend suggests an adaptive approach among consumers, balancing immediate financial needs with long-term planning.
Further bolstering this positive trajectory is an 8% quarterly increase in existing customers seeking additional advances. Rising house prices over the past six months have been a crucial factor in this development. This indicates a broader economic influence on consumer decisions regarding equity release, with housing wealth playing a multifaceted role in financial strategies.
David Burrowes, chair of the Equity Release Council, noted that although growth has been modest, the continuous trend is encouraging. He emphasised reports from advisers and providers that consumer confidence is gradually returning, although future growth may not follow a linear path. Burrowes highlighted the diverse motivations for equity release, including mortgage refinancing, gifting, home improvements, and supplementing retirement income.
The introduction of flexible repayment options has been a strategic focus, catering to diverse consumer needs. Product development teams have concentrated efforts on enhancing loan-to-value criteria, interest payment options, and minimising early repayment charges. As the year draws to a close, expectations are cautiously optimistic, contingent on stable interest rates and responsive consumer confidence toward forthcoming fiscal policies.
The equity release market is poised for steady growth, supported by consumer confidence and innovative financial products.
