The equity release market is on track to reach a record high for value in the three months to September, after homeowners released more than £1.049 billion from their property.
According to equity release adviser Key, the total value of equity released rose by 18.8% from nearly £884 million in the third quarter of 2020.
However, the number of equity release plans taken out decreased by 3.2% year-on-year to 10,333 and remained below pre-pandemic levels.
Key said the total amount of equity released in the first nine months of 2021 reached £2.989 billion, putting the market on course for a record £4 billion.
On average, customers released £101,593 in the third quarter, around 23% higher than the £82,827 in the same period of 2020.
Nearly three quarters of the money released was used for debt management and for helping family and friends. Around £588 million released was used to clear debts while more than two fifths (42%) of the cash given to family and friends was used for house deposits and 36% was given as an early inheritance.
Key said almost every region saw the value of property wealth released increase, with only Scotland and the South East recording small falls.
Northern Ireland led the way with the value of property wealth released more than trebling while Wales and East Anglia saw growth of 74.7% and 61.6% respectively.
Will Hale, CEO at Key, said: “Against the backdrop of a pandemic, the equity release market is on track to break the £4 billion barrier and potentially even touch £4.5 billion by the end of the year. This performance demonstrates how modern equity release products are now embedded within the mainstream financial services market, offering low rates and flexible features to address a wide range of different customer needs and wants
“This year we’ve seen increasing numbers of people using equity release to support families, manage their current borrowing and use the historically low rates to remortgage their existing equity release plans. Whilst many plans have been put on hold during the pandemic, we also expect to see the return of people looking to boost discretionary spending as they look again at how to fund their later life ambitions.”
Hale added: “Equity release and other later life lending products can offer a solution to many of the opportunities and challenges that people encounter as they approach and move through retirement However, it is vital that people consider all their options and get specialist advice to ensure they are making smart sustainable choices.”
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