"Looking forward, we expect the need for new sources of income in retirement will continue to grow as many people will be unable to rely on pressured pension pots."
The 34% rise in customers outpaces growth in first-time buyer, remortgage and homemover activity, with housing wealth withdrawals gaining ground on flexible pension payments as a source of retirement finance.
In Q2 2016, just 29p of housing wealth was unlocked by over-55s for every £1 of savings accessed via flexible pension payments following the introduction of ‘pension freedoms’ a year earlier.
This rose to 43p by Q4 2016, reaching 56p in Q4 2017, as property becomes increasingly important as a supplementary source of retirement finance.
Housing wealth withdrawals grew by 34% between H2 2016 to H2 2017. In comparison, flexible pension payments remained flat in H2 2017 and actually fell 4% year-on-year in Q4 2017.
Equity release is now attracting twice as many new customers as five years ago and the range of equity release product options has grown 25% year-on-year as rates continue to fall.
Average product rates fell by 0.23% over 2017 to 5.14% in January 2018, and 70% of options now offer consumers the choice to make ad-hoc, penalty-free voluntary or partial repayments of their loan, to minimise the build-up of interest and even reduce the loan over time.
David Burrowes, chairman of the Equity Release Council, commented: “The Spring 2018 Market Report, which marks my first as chairman of the Equity Release Council, comes at a pivotal time for the industry. The Council’s aim is for consumers to see equity release as a safe, mainstream and accessible financial solution to their needs in later life and retirement plans. With record levels of market growth and more flexible product options than ever before, using housing wealth to boost retirement income is becoming firmly established as a viable and compelling solution to consumer funding needs.”
“Looking forward, we expect the need for new sources of income in retirement will continue to grow as many people will be unable to rely on pressured pension pots. It is vital more people understand its possibilities not only to provide income in later life or pay off debts, but also to provide a ‘living inheritance’ for family members and help fund care needs. Helping young people get on the housing ladder and paying for social care are at the top of the political agenda, and we look forward to strongly advocating for the role equity release can play in helping to meet these policy challenges.”
