Equity release lending represented by monopoly houses on fifty pound notes

Equity release lending on course to exceed £2billion this year

According to the Equity Release Council, the third quarter of 2016 saw homeowners releasing a record breaking amount of money from their homes as equity release lending continues to grow.

Equity release lending grows as customers unlock record breaking amounts:

  • The total amount lent to equity release customers in the third quarter of 2016 reached £571.6m – the highest on record
  • The amount borrowed in 2016 so far means the £2billion figure could be reached by the end of 2016 for the first time ever
  • Drawdown plans are still the most popular choice, but lump sum lifetime mortgages have had biggest quarter for lending in ten years

As a growing number of homeowners turn to their properties to help fund their later years, the equity release industry has witnessed record-breaking figures across the last year.

In the last quarter alone, the total amount of money released grew by 26% compared to the same period in 2015, a total of £571.6m unlocked in just three months, according to the industry body, Equity Release Council.

With a record £1.48billion of total equity release lending so far this year, the total amount expected to be borrowed in 2016 is on course to break through the £2billion mark by the end of the year. 2015 was a record breaking year for equity release after it reached £1.61billion over the twelve months. If 2016 reaches the landmark £2billion figure, it will be for the first time ever.

Lump sum lifetime mortgages proved popular in this last quarter, with the product accounting for 37% of new plans, up from 33% in the second quarter. These sort of plans tend to be used for one-off payments such as clearing outstanding mortgages or other debts, but are also commonly used to fund bigger home improvements, dream holidays or for gifting to loved ones.

Drawdown plans, on the other hand, are still the most popular form of equity release lending and account for 62% of all new plans, according to the figures. These plans enable homeowners to access their housing wealth in a number of instalments after the initial release.

The facility can be helpful for topping up a pension income to improve day-to-day finances, or simply to provide a safety net in case a cash lump sum may be required at a later date.

Lower rates fuel growth

The equity release industry will no doubt have benefitted from new providers coming to the market, bringing with them fresh ideas and lower rates. The competition between providers over the last year has seen equity release costs fall and more innovative products launched. The figures indicate this has had a notable and positive effect on the booming market.

Interest rates have also been falling across the market over the last year. Whilst this has been bad news for savers, it has been great news for mortgage holders and equity release customers.

Nigel Waterson, Chairman of the Equity Release Council commented:

“Average equity release interest rates fell further than any other category of mortgage product during the first half of 2016 with independent research showing customers have never been better served in terms of products and rates.”

Even customers who have already tapped into their property wealth with equity release could benefit from the lower rates brought about by market conditions. Homeowners who have had a plan for more than five years may be able to secure a lower rate than they are on now.

A Bower specialist will be able to work out if repaying your plan early could work our financially better for you by fixing into a new, lower rate for life.

Speak to an equity release specialist

Homeowners considering a lifetime mortgage should seek the guidance of an independent specialist in retirement lending before making a decision.

When you come to Bower, your dedicated specialist will take the time to explain everything to you, including how equity release will reduce the value of your estate and how it may affect your entitlement to some state benefits.

Request your free guide to equity release, or arrange your free, no-obligation initial consultation by calling 0800 411 8668.