The appeal of using property wealth as an extra source of retirement income continues to grow, according to figures indicating record amounts of equity release lending.
- Q2 2015 lending of £384.3m is largest of any quarter since 2002
- Homeowners aged 55+ withdraw £4.2m of housing wealth each day
- More than 5,400 new equity release customers, up 11% from last quarter
- New plans taken out in H1 2015 top £710m – the largest H1 total on record
- Lump sum lifetime mortgage lending hits eight year high in H1, but drawdown grows faster year-on-year
Equity release lending to UK homeowners over the age of 55 totalled £384.3m in Q2 2015, the largest amount for any quarter since records began – surpassing the previous high of £375.4m reached in Q3 2014.
Industry figures from the Equity Release Council show the value of housing wealth released in Q2 2015 was up 18% both on the previous quarter and last year’s Q2 total of £325.6m. Homeowners aged 55+ effectively withdrew £4.2m of housing wealth every day from April to June.
This uplift comes despite savers gaining greater access to their pension pots under the freedoms launched on 6th April. With house prices rising again, it shows the growing appeal of using property wealth as an extra source of retirement income in later life.
Record lending in Q2 meant the total value of equity released in the first six months of 2015 hit £710million, the largest sum on record for the first half of the year and an 11% increase on H1 2014.
There were 5,414 new equity release customers in Q2 2015, an 11% increase on the last quarter: pushing the total number of new customers past 10,000 for the first six months of 2015.
Lump sum mortgage lending hits an eight year high – but momentum is with drawdown
The value of lending, via lump sum lifetime mortgages, increased by 10% year-on-year in H1 2015 to reach £285.3m. This is the highest total for lump sum activity in the first half of any year since H1 2007 when the value hit £355.9m.
However, the value of lending via drawdown lifetime mortgages surpassed this rate of growth, rising 12% year-on-year from £379.2m (H1 2014) to £423.5m (H1 2015). It also rose faster from Q1 to Q2 (21% vs. 14% for lump sum products) as customers took advantage of the flexibility to withdraw their housing wealth in regular instalments rather than as a one-off amount.
Home reversion plans account for less than 1% of the overall equity release market, yet these too saw an increase of 18% in lending from £534,765 in Q1 2015 to £632,647 in Q2 2015.
Figures and stats from Equity Release Council