Total equity release lending rose to record highs in 2021 as confidence in the market rebounded. The latest figures from the Equity Release Council revealed total lending to homeowners aged 55 plus rose by 24% to £4.8 billion last year.
Stephen Lowe, group communications director at Just Group, said of the data: “Confidence rebounded last year as people who had delayed financial decisions during the early months of the pandemic chose to crack on with their plans. Rising house prices, historically low interest rates and a high level of competition between lenders is delivering a positive environment for people considering using some of the value tied up in their homes.”
The number of new and returning customers in the fourth quarter of 2021 reached 19,975, up from 19,300 in the third quarter. A total of 76,154 customers took out new equity release plans over the course of the year.
Meanwhile, customers borrowed £1.34 billion of property wealth in the three months to December, surpassing the £1.17 billion recorded in the second quarter, and taking the total amount for the year to a record £4.8 billion.
While rising pressures in the form of higher costs of living and greater job insecurity has driven many over-55s to improve their finances through housing equity, experts agreed that an emerging customer base is also turning to these loans to provide different financial options.
Stuart Wilson, corporate marketing director at more2life, commented “Not only have we seen wealthier homeowners looking to include property wealth in their retirement planning but also an uptick in the number of people remortgaging existing plans to benefit from lower rates and product flexibilities.
“Against this complex backdrop advisers must continue their work educating borrowers on the range of options available and assessing client vulnerability.”
Lowe believes advisers will become increasingly focused this year on how a client’s property assets can be combined with their other pensions and investments to meet their retirement goals.
Lowe said: “Releasing funds by downsizing is often not practical or desirable and equity release offers a powerful way for a wide range of homeowners to use the wealth they have in their property to provide extra income, making financial gifts, undertake home improvements or adaptations, travel or pay for care.
“Innovation in the sector is helping advisers better tailor plans to each client’s unique needs. Increasing choice combined with new developments such as medical underwriting give them the tools to deliver personalized plans at lower costs.”
Alice Watson, head of marketing, insurance at Canada Life, echoed the sentiment: “Today’s report shows that equity release has not only proven its resilience but also its relevance in modern retirement journeys as people seek to support their lifestyles or help out family members financially.
“As cost of living pressures start to take hold we may see even more people turning to their property wealth, particularly as house prices continue to grow across all areas of the country. As shown throughout the pandemic, the equity release industry will continue to evolve and adjust its product range to best provide for new and existing customers.”
