Total equity release lending has reached £716 million in Q3 - loaned to 7,379 new customers and 8,466 returning drawdown customers. The average initial drawdown is £63,238 but returning customers have the potential to borrow more in the future at the prevailing rate.
The average lumpsum is £94,806 but both lumpsums and initial drawdowns are down about a third on an annual basis.
David Burrowes, Chair of the Equity Release Council, said:
“These figures suggest the process of building back is slowly underway in the equity release market, after a period where higher interest rates have prompted consumers and industry to reach for the ‘reset’ button.
“With customers starting to venture back, the market is at the start of a gradual but fragile road to recovery, with pent-up demand likely to emerge in future years as the interest rate cycle begins to turn again.
“While the clock has been wound back on lending activity and loan sizes, product innovation has increased the flexibility of lifetime mortgages.
“New customers of plans that meet our high consumer standards can use voluntary repayments to keep their costs in check while existing customers are free to take extra instalments of money as they need it, safe in the knowledge their previous borrowing is fully insulated from rate rises.
“Looking ahead, we must be wholly committed as an industry to putting equity release in its proper context as one of a range of later life lending options and putting property wealth in its proper context at the heart of every retirement planning conversation.”
Stephen Lowe, group communications director at retirement specialist Just Group, said:
“Overall business levels are still sharply down on a year ago but there are optimistic signs that a floor has been reached on which to build.
“Both new customer numbers and total lending in Q3 were the highest we’ve seen in 2023 and we would expect further improvement going forward. After the shock caused by the rapid rise in interest rates over the last two years, it is positive to see the Council highlight a recent reduction in the average lifetime mortgage interest rates.
“An ageing population means an increasing number of homeowners are heading into retirement each year. The over-65s are estimated to have £2.6 trillion of net housing wealth*. That offers a lot of firepower to those seeking ways to supplement their income, improve their living standards, pay off more expensive debt, or to generate lump sums for themselves or loved ones.
“Higher interest rates are naturally making people cautious, but the fundamental drivers of growth remain as strong as ever. The range of options available makes it a difficult market for people to navigate alone. We urge people to seek out high-quality professional advice to ensure they consider all the alternatives available to them and choose the best solution to their individual needs.”
Simon Gray, managing director at equity release advisory firm HUB Financial Solutions, said:
“It’s good to see the market stabilising and some modest growth after such a tumultuous period.
“The flexible options built into many of today’s plans are putting customers in control, and many are choosing interest-servicing options to actively manage their borrowing, with the knowledge they can take payment holidays or switch to roll-up interest later. There’s a huge amount of choice enabling advisers to tailor plans to customer needs.
“There is an increasing awareness among people of the value locked up in their homes. They have the opportunity to consider how to use that wealth, whether it is to bolster their own standard of living in later life or gift it to the next generation. High-quality professional advice remains essential for customers to find the most suitable deals that give them the right combination of certainty and flexibility, whatever their financial objectives.”
