New customer revival drives 15% rise in Q2 equity release lending

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The Equity Release Council’s latest quarterly market report shows that new customer numbers rose by 12% in Q2, compared with Q1, while total lending rose 15% to £578m.

A double-digit rise in the number of customers taking out new products made Q2 2024 the busiest quarter for almost a year for the equity release market in terms of total customers served and total lending activity.

In addition, existing drawdown customers, who are allocated a cash reserve when they first take equity release, continued to make use of this facility.

A 3% increase to 8,051 returning drawdown customers during Q2 made this the most resilient part of the market when comparing activity year-on-year.

Increases in average loan sizes on both a quarterly and annual basis offer another sign of returning customer confidence. New drawdown customers are making larger initial withdrawals and reducing the amount held in reserve.

The Council’s data is unique in that it is made up of aggregated figures collected from all UK equity release providers, encompassing business from advice firms across in the market.

David Burrowes, chair of the Equity Release Council, said:

“Following a period of economic uncertainty, we are starting to see consumer confidence gradually return to the market with increasing numbers of new customers choosing to use their housing equity to support their needs in later life.

“The pick-up in activity between the first and second quarters is a welcome reversal of the downward trend seen one year ago. There is a long way to go to unlock the market’s full potential, but there are reassuring signs in these figures that we are turning the corner and acclimatising to this unfamiliar interest-rate environment after years of rock-bottom rates.

“Almost 20 years on from their introduction, it’s notable that drawdown products are becoming the majority preference once again. Some of the new flexibilities embedded into the modern market such as fixed early repayment charges are equally designed for the long-term and set up so that customers can benefit from years to come.

“Adviser feedback suggests customers are continuing to find a variety of uses for their property wealth, with gifting and funding home improvements both key motives behind activity in Q2 along with boosting everyday income and closing pension shortfalls.

“However, refinancing an existing mortgage, including interest-only loans, continues to rank as the biggest driver of current market activity. The innovative design of modern lifetime mortgages means anyone taking this route will have lots of ways to smooth the transition, not least the freedom to make repayments when they can afford to without the risk of repossession looming over them.”

*  The relatively small number further advances taken out (1033 in Q2 2024) means that data on this specific metric is more volatile.

About the data: The Council’s market data is compiled from actual whole-of-market returns and is in no part estimated, making it the UK’s definitive equity release data. All data has been collated by the Council, unless otherwise stated.

About the product: Equity release allows older people to access the wealth in their homes, without necessarily having to sell or move. Lifetime mortgages make up more than 99% of the market. They enable people to borrow against their homes without making repayments unless they choose to. The loan and interest, or part thereof, is paid when the customer dies or goes into long term care. Since 1991, more than 675,000 homeowners have accessed £49bn of property wealth via Council members to support their finances.

About the Council: The Council is the representative trade body for the UK equity release market. Plans that meet the Council’s standards come with five product safeguards: no negative equity guarantee; fixed or capped rates for life; the right to port; the right to make overpayments; and secure tenure for life. These safeguards are underpinned by mandatory independent legal advice which ensures the customer understands the risks and implications of the plan.

More information: Call Andy Lane and Libby Wallis at Instinctif Partners on 0207 457 2020; email [email protected].