Equity drawdown was the most popular product as the equity release market enjoyed its best quarter this year for volume and value of new business, according to the latest figures released by Key.
Key’s Equity Release Market Monitor showed 11,772 plans worth £886.59 million were taken out during the third quarter, with an additional £368.58 million reserved for future use, as customers took a cautious approach amid growing political and economic uncertainty.
The equity release specialist said the volume of plans taken out was up 8% quarter-on-quarter, but down 3% year on year.
According to the data, drawdown products accounted for 75% of all equity release plans sold during the third quarter, compared to 62% during the same period of 2018. However, the initial amount released dipped year-on-year to £58,729 during the three months to September, from £60,922 during the third quarter of 2018.
Key said the lower figure suggested that consumers see real benefit from the flexibility offered by these products as they “remain keen to manage their borrowing carefully” in light of the current economic environment.
Key’s data also showed a rise in the number of over-55s looking to ‘remortgage’ their equity release plan to release more funds or save money from 3% to 5%.
Will Hale, CEO, Key, said: “The growth in popularity of drawdown, the smaller amounts released and the increasing numbers of customers looking to remortgage all points to borrowers who see the value of using their housing equity but want to do this as cautiously and responsibly as possible.
“Historically low rates and the wide range of products with innovative features mean that those who do want to help themselves or their families by accessing the value tied up in their home have a range of options. However, it also means that specialist later life advice is vital as making the wrong choice around whether to borrow, how much to borrow and how to borrow can have long term consequences.”