Equity release market grows for two successive quarters for first time in two years

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The Equity Release Council’s latest quarterly market report for Q3 2024 shows that new plans agreed and total lending rose for a second successive quarter for the first time in two years, as the market’s gradual recovery continues.

Homeowners over the age of 55 withdrew £615m of property wealth from their homes between July and September, a 6% increase from Q2 2024.

With the number of new plans agreed rising by 2% to 5,370 over the same period, Q3 became the first time since before the mini-Budget of Autumn 2022 when the equity release market has seen two successive quarters of growth.

Average loan sizes increased modestly, with new lump sum lifetime mortgage customers taking £111,618 while those taking drawdown lifetime mortgages took £69,952 upfront and reserved another £49,747 for future use.

A 8% quarterly rise in existing customers taking further advances to extend their loans was a sign of customers having sufficient equity remaining in their homes, helped by UK house prices having risen year-on-year for six months in a row, since February 2024, according to the latest UK House Price Index.

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 the market.

Commenting on the data, David Burrowes, chair of the Equity Release Council, said:

“Returning growth may have been modest to date, but it’s particularly encouraging to see the trend continue during the transition period sandwiched between the arrival of a new Government in early July and its first Budget statement later this month.

“Behind these improving numbers are reports from both advisers and providers alike   that consumer confidence is steadily returning. That may not translate into an uninterrupted upwards trajectory from here, but we know there are many households who have decided that releasing equity is right for them and are now focused on ensuring the timing is also right.

“Housing wealth continues to play a multi-purpose role in people’s financial plans, with mortgage refinancing, gifting and home improvements all common motivations for customers at the moment, alongside topping up retirement income.”

“New customers who need to press ahead have the use of flexible repayment options to manage their borrowing, while people with less pressing needs are watching and waiting to see the future path of interest rates.  To further support homeowners borrowing ambitions, product development teams have been busy adding to the flexible features and criteria available for loan-to-values, interest payments and early repayment charges.

As we head towards the end of the year, we anticipate that we will continue to see steady growth if interest rates remain stable and consumer confidence responds positively to the forthcoming Budget.”

* = the relatively small number further advances taken out (Q3 2024 – 1,115) 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 not estimated nor grossed up, 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: Visit www.equityreleasecouncil.com; call Andy Lane and Libby Wallis at Instinctif Partners on 0207 457 2020; email [email protected]

ENDS