New equity release plans rise by a third as lending passes £800 million in a single quarter for first time

Over-55s withdrew a total of £824 million of property wealth from their homes via equity release plans during Q3 2017, according to the latest quarterly figures from the Equity Release Council (The Council)1, as increased competition and a continued commitment to consumer safeguards supported arise in new customer numbers and lending activity between July and September.

Total lending surpassed the £701m recorded in Q2 this year to become the highest figure seen in any single quarter since The Council began tracking quarterly activity in 2002. This represents a 44% year-on-year increase from Q3 2016 when lending stood at £572 million.

Members of The Council recorded a total of 17,982 customers between July and September, up by 12% from Q2. Of these, 9,905 of were new customers, representing a 17% quarterly increase from Q2 and a 34% annual rise compared with Q3 2016.

The remainder were made up of 6,849 returning drawdown customers releasing housing wealth in instalments (up from 6,566 in Q2) and 1,138 further advance customers agreeing extensions to existing plans (up from 1,002 in Q2).

The growing range of products on the market and increasing consumer appetite to use housing wealth as a source of retirement finance mean that Q3 lending activity has now risen by 82% in the last two years, up from £453 million in Q3 2015. New customer numbers have risen 64% over the same period from 6,049 in Q3 2015.

Continued rise in drawdown customers

A further shift towards offering more breadth across drawdown lifetime mortgages to reflect consumer demand has meant the proportion of new customers choosing this option over lump sum lifetime mortgages or home reversion plans in Q3 2017 rose by nine percentage points to 77% from the previous quarter (68%) and 15 percentage points year-on-year (from 62%).

Drawdown products typically see customers releasing smaller amounts of equity to begin with (£64,793 in Q3 2017 vs. £100,389 via lump sum plans), therefore reducing the build-up of interest over the duration of the plan. It also provides customers with the flexibility to unlock further sums via future instalments as and when they need to.