Nearly two-thirds of older generation use online platforms to demystify later life finances

To visit the Home Advantage hub and read more reports from the study click here

62% of UK homeowners over 55 would use price comparison websites to research different financial products, with 63% agreeing they provide helpful information
42% of female homeowners over 55 would make price comparison websites their first port of call during research vs 39% of men
Older homeowners are more likely to find price comparison websites easy to use (64% vs. 62%)
Consumer websites are more popular amongst homeowners over 55 than speaking with a bank or building society when researching financial products (36% vs 35%)

Almost two thirds of (62%) UK homeowners aged 55* and over would look to price comparison websites (PCWs) to compare different financial products, according to new research from the Equity Release Council (the Council) and Equity Release Supermarket on the role of technology in supporting the customer journey.

The Council’s bi-annual Home Advantage study of money matters among 5,000 UK adults shows growing confusion among homeowners about the financial options available to them in later life.

A third of homeowners over 55 (33%) say they are confused about their options in later life, a slight improvement from 2021 when 34% said the same. Yet, new data reveals female homeowners over 55 feel more confused about what mortgages are available to them than their male counterparts (37% vs 28%). Moreover, female homeowners over the age of 55 feel less confident about their retirement finances than male homeowners of the same age (50% vs 66%), yet women are also less likely to use PCW’s when researching financial products (25% vs 28%).

However, homeowners aged between 55-64 specifically are more likely to find PCWs easy to use (65% vs. 62%) and are also more trusting of PCWs than across all other age groups (52% vs. 51%).

PCWs currently rank among the four most popular sources of information relied on by older homeowners. When asked what sources of information they favour when researching different financial products, over 55 homeowners prioritised using consumer websites (36%), speaking to their bank or building society (35%), speaking to a financial adviser (30%) or using a PCW (27%).

Amidst these challenging economic times and against the backdrop of an evolving later life lending market offering an increasing variety of products, consumers have a growing desire to take control and have greater awareness of financial products available to them with 61% of all UK homeowners – equivalent to 18.7 million people**- interested in releasing money from their property in later life to satisfy financial needs.

In addition, with more ‘ultra-long mortgages’ running beyond the average state pension age, the research reveals the prominent role property plays in supporting a comfortable retirement evidenced by the large number of homeowners over 55 believing a mortgage in later life is becoming more ‘common’ and ‘acceptable’ (44% respectively).

Jim Boyd, CEO of the Equity Release Council, comments:

“While it might be cliched to talk about silver surfers, over-55 homeowners see consumer websites as their first port of call when researching financial information and are more comfortable than some other age groups when using price comparison websites. That said, they are still likely to rely on the human touch citing their bank or building society and their financial adviser as popular sources of information.

“With increasing numbers of homeowners admitting that they are confused about their later life options, it is vitally important that they not only undertake as much research as possible from reputable websites but also speak to experts. The real value of expert financial advice is helping customers to make sense of all their options, consider the implications and answer some of the many questions that conflicting information sources can raise.

“Alongside qualified advice, it is essential we get ahead of future demand by harnessing technology to ensure consumers can find the information they need to make informed choices. Without the right prompts in place, people may never get to the stage of sitting down with an adviser, which is why later life options need the same online visibility associated with other everyday financial products to help more people see their potential.”

Mark Gregory, Founder and CEO of Equity Release Supermarket, comments:

“Until now, researching later life options online proved difficult given the lack of information and choice across the market, leaving consumers feeling confused by their options.

“However, with tools and live calculators consumers have a vast amount of real-time and accurate information at their fingertips to personalise their requirements before engaging with a financial adviser.

“The study also revealed that those aged 55 and above are much more tech savvy than most realise, relying on online financial research and comparison tools. Hence, there is an upsurge in the demand and reliance on platforms such as smartER™.”

Lifetime mortgages, the most common form of equity release, are typically loans for people over 55 that are usually repaid when the customer dies or goes into long-term care.

The Equity Release Council is the representative trade body for the UK equity release sector. It sets industry standards and safeguards, such as a no negative equity guarantee and the right to penalty-free repayments, enabling customers to manage their loans.

ENDS

Notes to Editors

All findings come from independent research carried out by Censuswide among 5,000 nationally representative UK adults aged 18+ in June 2021 and November 2023. Combined with analysis of government, regulatory and industry data, Home Advantage represents the Council’s biggest study to date of consumer attitudes and behaviours in relation to their personal finances and property wealth. The 2023 edition of the research is supported by Canada Life and Equity Release Supermarket.

*‘homeowners over 55’ refers to homeowners aged 55+.

**Population data published by the ONS reveals that there are 55,190,347 adults aged 16+ in the UK. Our survey found that 55.63% are homeowners (30,702,390) and 61% of homeowners are interested in unlocking property wealth which equates to 18,728,458 (18.7m). https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/datasets/populationestimatesforukenglandandwalesscotlandandnorthernireland

About the Equity Release Council

The Equity Release Council (the Council) is the representative trade body for the UK equity release sector with more than 750 member firms and 1,800 individuals registered, including providers, funders, regulated financial advisers, solicitors, surveyors and other professionals.

It leads a consumer-focused UK based equity release market by setting authoritative standards and safeguards for the trusted provision of advice and products. Since 1991, more than 650,000 homeowners have accessed £46bn of property wealth via Council members to support their finances.

The Council also works with government, voluntary and public sectors, and regulatory, consumer and professional bodies to inform and influence debate about the use of housing wealth in later life and retirement planning.

About Equity Release Supermarket

Equity Release Supermarket is the independent advisory arm of Equity Release Group, founded by Mark Gregory to make equity release work for everyone.

With a focus on advice and education, Equity Release Supermarket has grown to become the UK’s No.1 independent equity release advisory service. Combining market leading technology with the highest quality, award-winning financial advice has been central to its continued success for over a decade.

The firm have a 100% Trusted Merchant Status from independent review service Feefo and are regulated directly by the Financial Conduct Authority (FCA) No. 584063. They are also members of the Equity Release Council, who set the standards for the industry.

For more information, please visit: https://www.equityreleasesupermarket.com

For more information about equity release comparison tool, smartER, please visit: https://www.equityreleasesupermarket.com/smarter-equity-release-search

For more information:

Visit www.equityreleasecouncil.com

Email Instinctif Partners at [email protected]

Phone Georgia Turton, Isaac Seiger and Libby Wallis on +44 (0) 207 457 2020

Council publishes Q2 2024 lending figures

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

To read the full report please click here

Overall activity		Quarterly change	Annual change
Total lending	£578m	+15%	-13%
Total customers	14,324	+1%	-16%
New customers	5,240	+12%	-22%
Returning drawdown customers*	8,051	+4%	+3%
Further advance customers*	1,033	-41%	-59%

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.

Average loan sizes		Quarterly change		Annual change
New lump sum	£110,969	+7%		+18%
New initial drawdown	£65,453	+10%		+10%
New drawdown reserve facility	£45,839	-17%		-7%
Returning drawdown	£12,097	+1%		+6%
Lump sum further advance*	£28,192	+67%		+25%
DD initial further advance*	£26,641	+16%		+10%
DD further advance reserve facility*	£8,296	+25%		-41%

Product choice among new customers	Drawdown: 56%		Lump sum: 44%

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].

Q1 2024 equity release market data

Drawdown in vogue as equity release market ‘maintains holding pattern’ in Q1

14,216 new and returning customers made use of equity release products between January and March, up 4% from Q4 2023 (13,651).
Returning customers drove a 6% quarterly increase in drawdown activity as confidence held firm amongst those with existing plans.
56% of new customers opted for drawdown lifetime mortgages, the highest quarterly share since the Bank of England began to increase the base rate from 0.1% in Q4 2021.
New customer numbers dipped 11% on Q4 2023 and when coupled with the shift towards drawdown, resulted in total lending of £504m for Q1, down 6% from £535m in Q4 2023.

David Burrowes, Chair of the Equity Release Council, comments:

“The Q1 2024 data highlights the ongoing challenges facing the residential property market in the UK as the nation waits to see what happens next with interest rates and the health of the economy.

“In our market, consumer confidence is holding up well among people with existing plans, who are not shy of making use of drawdown facilities or exploring further advances. New customer numbers are lower than last year with feedback from the market suggesting that older homeowners are adopting a more cautious approach to borrowing as there are hopes of interest rate reductions in the near future.

“The flexibilities offered by modern lending products are becoming increasingly popular as customers use them to manage their borrowing in a way that best meets their individual circumstances. New customers are choosing drawdown plans with smaller initial advances while existing customers are being more modest about their borrowing compared to the start of last year.

“As we look to the rest of 2024, we are confident that the green shoots that we are starting to see will germinate and the market will return to growth. Structural drivers of the later life lending sector are only due to intensify over the coming years and Council members are ready to support clients as they make sustainable long-term choices about their finances.”

Overall activity

Of the 14,216 customers who were active in the equity release market between January and March 2024, 55% were drawdown customers taking withdrawals from existing plans. One in three active customers took out new plans (33%) while the remaining 12% agreed further advances (extensions) on existing plans. [see Graph 1]
Total quarterly lending of £504m remained subdued due to the dip in new customers and the growing preference for drawdown products, where customers hold a significant chunk of their loans in reserve for future use.

Trends among new customers

New customer numbers (4,698) were 11% lower in Q1 than in Q4 2023 and 31% lower than in Q1 2023. With rumours of an interest rate cut ahead of summer, potential new customers are adopting a ‘wait and see attitude’ unless they have a pressing need for the funds.
Drawdown lifetime mortgages recorded their highest share of new customer activity in Q1 for more than two years. While 45% of new customers opted for drawdown in Q2 2022, 56% made that choice in Q1 2024.
New drawdown customers typically agree larger loans than lump sum customers, averaging £114,911 vs. £103,492 in Q1. However, with only £59,660 taken upfront, flexible product design makes it possible to benefit from future rate cuts by holding the remainder back for future needs, with each withdrawal charged at the prevailing rate at the time. [see Graph 2]
Q1 2024 saw new drawdown customers minimising the impact of higher interest rates by reducing the first instalments of their loans by 4% to £59,660, compared with £62,198 in Q4 2023, and increasing their reserved facility by 35% to £55,251 from £40,962 in Q4.
New drawdown customers are now taking just 52% of their loans upfront with the rest held in reserve. This compares to a 66% average being taken upfront from 2017-2022. [see Graph 3]

Trends among returning customers

The number of returning drawdown customers taking instalments from their reserve facility reached 7,753 in Q1 2024, an increase of 6% on Q4 2023 (7,314).
Each returning drawdown customer took £12,822 on average, up by 9% from £11,782 in Q4 but still 4% lower than was the case a year earlier in Q1 2023 (£13,345).
In line with Equity Release Council standards, the interest rate is fixed or capped for each new instalment at the point of withdrawal, protecting customers’ borrowing from any future rate rises.
With 1,765 further advances agreed in Q1, existing customers remain confident in seeking extensions on their plans, helped by the long-term growth of property prices leaving them with more equity to withdraw within the careful loan-to-value limits set by providers.

Market data

Graph 1: Equity release customer numbers per quarter by customer type

Graph 2: Average new loan sizes among equity release customers

Graph 3: Breakdown of new drawdown lifetime mortgages between initial loan and reserves

About the data

The Equity Release Council’s market statistics are compiled from member activity, which includes all national providers in the equity release market. This latest edition was produced in April 2024 using data from customer activity during the first quarter of the year (January to March). All figures quoted are aggregated for the whole market and do not represent the business of individual member firms.

Equity release products are available to homeowners aged 55+, enabling them to release money from the value of their home following a regulated process of financial advice and independent legal advice to determine whether this is suitable for their individual circumstances and long-term needs. Funds released are typically used for a range of purposes including providing additional retirement income, funding one-off expenses and lifestyle purchases, consolidating debts, meeting homecare costs and gifting a ‘living inheritance’ to family or friends.

For a comprehensive list of members, please visit the Council’s online member directory.

About the Equity Release Council

The Equity Release Council is the representative trade body for the UK equity release sector with more than 750 member firms and 1,900 individuals registered, including providers, funders, regulated financial advisers, solicitors, surveyors and other professionals.

For more information:

Visit www.equityreleasecouncil.com

Email Instinctif Partners at [email protected]

Phone Andy Lane and Libby Wallis on +44 (0) 207 457 2020

Q4 and FY 2023 equity release market statistics

New and returning equity release customers in Q4 totalled 13,651, down from 17,078 in Q3 2023 and 20,597 in Q4 2022.
Throughout 2023, 26,119 customers took out new equity release plans, with drawdown plans restored as the majority preference – attracting 53% of customers last year and 55% in Q4.
The average amount borrowed by new customers in Q4 2023 was £79,484, compared to £106,917 a year prior.
With smaller loan sizes and the ability to make voluntary partial repayments on all new plans, customers are better able to manage their exposure to higher interest rates
2023 saw 64,448 active customers taking out new plans, making use of drawdown reserves or agreeing extensions to existing plans, down 31% year-on-year.
Total annual lending of £2.6bn in 2023 followed a record-breaking £6.2bn in 2022, returning the market to the level of activity last seen between 2016 to 2017 (£2.1bn to £3.1bn).

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

“Every corner of the mortgage market saw rising interest rates put the brakes on activity in 2023, and equity release was no exception with customers and their advisers taking a cautious approach. This resulted in loan sizes shrinking and fewer people borrowing for more aspirational reasons.

“While we’ve grown accustomed to stronger demand in recent years, we shouldn’t lose sight of how far the market has matured since activity was last at these levels. New product features and customer protections mean we are well positioned to serve the inevitable demand that will come as confidence returns. Council standards represent the pinnacle of protection for older consumers, which makes it crucial for them to seek out a member firm when exploring their options.

“It’s clear some people are holding out for future rate cuts, but with no timeline as to when this may happen or how sustained this will be, older homeowners will need to continue to consider what is right for their individual circumstances. Many people are relying on their property wealth to retire in comfort, and we are focused on ensuring they can access it confidently and securely.

“Whether the customer wishes to top up their pension, support their family or manage their borrowing in retirement, today’s products offer more flexible options to help manage costs, with voluntary repayments baked into every new plan. Ultimately it is about choice and it is vital that people plan carefully for the future and only commit to long-term products after careful consideration, expert advice and consulting with loved ones.”

1. Key statistics

Overall activity for Q4 2023:

The number of new and returning customers in Q4 was 13,651, down from 17,078 in Q3 2023 and 20,597 in Q4 2022
Customers accessed £535m of property wealth via equity release products between October and December. This was broadly in line with the quarterly average from 2016 and made the final quarter the quietest of 2023.
Across all product types, the average amount borrowed by new customers in Q4 2023 was £79,484, compared to £106,917 a year prior.

Overall activity for FY 2023:

The year as a whole saw 64,448 active customers either taking out new plans, making use of drawdown reserves or agreeing extensions to existing plans. This was a 31% decrease year-on-year from 93,421 in 2022 [see graph 1].
Total lending of £2.61bn in 2023 followed a record-breaking £6.2bn in 2022, returning the market to the level of activity last seen between 2016 to 2017 (£2.1bn to £3.1bn).

New customer trends for Q4 2023:

A total of 13,651 new plans were agreed between October and December 2023. This was the lowest quarterly total of the year, mirroring the seasonal pattern seen in 2022.
More than half (55%) of new customers opted for drawdown lifetime mortgages in Q4, the highest percentage of the year and up from 47% in Q4 2022.
New drawdown customers decreased their initial borrowing by 25% year-on-year by taking £62,198 upfront compared with £82,643. They reserved a further £40,962 for future use, giving a total loan size of £103,160, down 22% from £132,861 a year ago.
New lump sum customers took a similar total amount (£100,978) as a single withdrawal, which was 21% less than the average £128,382 lump sum plan from Q4 2022.

New customer trends for FY 2023:

Overall, 2023 saw 26,119 new plans agreed, a drop of 47% from 49,285 in 2022. The majority preference (53%) shifted back towards drawdown lifetime mortgages, reversing the split from 2022 when lump sum lifetime mortgages made up 52% of new product sales [see graph 2].
This shift demonstrates the additional flexibility that customers are seeking to manage higher interest rates. With interest only applied as money is withdrawn, drawdown plans come with the benefit that, if rates fall, future withdrawals could be charged at a lower rate.
Comparing 2023 to 2022, new lump sum customers decreased their average loan sizes by 26% from £131,687 to £97,878 – the first time this borrowing has been below £100,000 since 2019.
New drawdown customers agreed similar reserve facilities in 2023 as 2022 (£43,687 vs. £45,625) but cut back their initial borrowing by 31% from £89,242 to £61,652 [see graph 3].

Returning customer trends for Q4 2023

The final quarter saw 7,314 existing drawdown customers dip into their agreed reserves. While this was down 14% from 8,466 in Q3, it represents a 3% uptick from 7,071 in Q4 2022.
The average instalment taken by a returning drawdown customer was £11,782 in Q4, down from £12,700 in Q3 2023 and £14,180 in Q4 2022. Taking smaller instalments while rates are higher will again limit customers’ exposure to higher costs.
Further advance activity in Q4 2023 returned to levels typically seen from 2017-2021, with 1,045 extensions agreed to existing plans. This compares to 1,233 in Q3 2023 and 2,352 in Q4 2022.Returning customer trends for FY 2023:
Across 2023 as a whole, 31,329 returning drawdown customers took funds from their agreed reserves. This was down moderately from 35,474 in 2022 but higher than the 2021 figure (30,521), meaning this area of the market has been the most resilient in the face of higher interest rates.
For the full year, 7,000 customers agreed extensions to their existing plans. While this was a fall from 8,662 in 2022, it represents a significant increase on 4,669 from 2021. Recent years of renewed house price growth across the UK will have provided some homeowners with more equity in their homes to draw on as they look to offset rising living costs.

2. Market data

To view the graph data please download the full release here.

3. About the data

The Equity Release Council’s market statistics are the definitive measure of equity release activity, using whole-of-market data encompassing including all active UK providers and advice firms. This latest edition was produced in January 2024 using data from customer activity during the fourth quarter of the year (October to December). All figures quoted are aggregated for the whole market and do not represent the business of individual member firms.

For a comprehensive list of members, please visit the Council’s online member directory.

4. About the Equity Release Council

The Equity Release Council (the Council) is the representative trade body for the UK equity release sector with more than 750 member firms and 1,800 individuals registered, including providers, funders, regulated financial advisers, solicitors, surveyors and other professionals.

For more information:

Visit www.equityreleasecouncil.com

Email Instinctif Partners at [email protected]

Phone Libby Wallis, Andy Lane and Mike Norris on +44 (0) 207 457 2020

Q3 2023 equity release market statistics

Equity release market sees growth for the first time in 12 months with quarterly increases in both new customers (10%) and total lending (8%).
Total lending reaches £716m in Q3 loaned to 7,379 new customers and 8,466 returning drawdown customers.
The average initial drawdown is £63,238 but returning customers have the potential to borrow more in the future at the prevailing rate.
The average lumpsum is £94,806 but both lumpsums and initial drawdowns are down about a third on an annual basis.
Market remains suppressed at 2017 levels with new customers down (45%) and total lending down (58%) on an annual basis.

David Burrowes, Chair of the Equity Release Council, said: “These figures suggest the process of building back is slowly underway in the equity release market, after a period where higher interest rates have prompted consumers and industry to reach for the ‘reset’ button.

“With customers starting to venture back, the market is at the start of a gradual but fragile road to recovery, with pent-up demand likely to emerge in future years as the interest rate cycle begins to turn again.

“While the clock has been wound back on lending activity and loan sizes, product innovation has increased the flexibility of lifetime mortgages.

“New customers of plans that meet our high consumer standards can use voluntary repayments to keep their costs in check while existing customers are free to take extra instalments of money as they need it, safe in the knowledge their previous borrowing is fully insulated from rate rises.

“Looking ahead, we must be wholly committed as an industry to putting equity release in its proper context as one of a range of later life lending options and putting property wealth in its proper context at the heart of every retirement planning conversation.”

Key statistics for Q3 2023

Overall activity

A total of 17,078 new and returning customers used equity release products – primarily lifetime mortgages – between July and September 2023 to unlock wealth from their homes.

The number of active customers this quarter was very slightly up from 17,028 in Q2, although it remained down 33% year-on-year from 25,519 in Q3 2022
A total of £716m was unlocked by new and returning customers between July and September. This represents an increase of 8% on the previous quarter (£663m) and meant Q3 was the busiest quarter of 2023 so far for lending.
Currently lending activity of c.£700m per quarter is broadly in line with levels last seen during the first half of 2017, excluding the first lockdown during the Covid-19 pandemic

Trends among new customers

The number of new plans agreed during Q3 2023 was 7,379. This was up by 10% from 6,682 in the previous quarter, indicating a slight improvement in consumer confidence and market conditions, although the total remained 45% lower than Q3 2022 which saw 13,452 new plans
Data from Moneyfacts Group PLC indicates that equity release product pricing improved from an average rate of 7.52% in July to 6.63% in September¹. The Council’s Autumn 2023 Market Report shows that the gap between lifetime and residential mortgage rates has fallen significantly both over the last decade and in the last 12 months, making lifetime mortgages more competitive even in an environment of higher interest rates.
On a monthly basis, new customer numbers rose to 2,502 in July, up from 2,462 in June, and peaked at 2,577 in August before dipping back to 2,300 in September.
New customers were broadly split when it comes to product choice: 53% opted for drawdown lifetime mortgages, taking an initial withdrawal up-front with more held in reserve for future use, while 47% of customers opted for a single lump sum. This reversed the trend in Q3 2022 when the equivalent split was 48% drawdown and 52% lump sum.
The combination of customer caution, higher interest rates and lower maximum product loan-to-values (LTV) has seen customers reduce the amount they borrow over the last year:

- At £63,238, the average first withdrawal from a new drawdown plan was 28% lower in Q3 2023 than a year earlier (£88,340 in Q3 2022).
- This average first withdrawal is on a par with the average from Q3 2019 (£63,222), despite UK house prices having risen by a quarter (25%) since September 2019.²
- The average new lump sum lifetime mortgage from July and September was also 29% lower with customers taking £94,806 compared to £133,770 a year earlier. This is the lowest average since Q2 2019 (£93,712).

Trends among returning customers

With interest rates fixed or capped at the point of withdrawal for products which meet Council standards, the number of drawdown customers making new withdrawals from existing loans rose by 8% in Q3 2023 compared to Q2 2023, from 7,817 to 8,466.
While returning drawdown numbers are still 12% down year-on-year, this part of the market has been the least impacted by the slowdown. This is likely due to existing customers being able to limit the impact of higher interest rates by borrowing incrementally, with their existing borrowing protected from rising rates.
In common with new customers, returning customers reduced their borrowing in Q3 compared to a year earlier, withdrawing £11,863 on average – down 9% from £12,968.
The number of further advances (loan extensions) agreed on existing plans fell significantly in Q3 2023, with the total of 1,233 down by 51% from 2,529 in Q2 2023. This is also a 49% decrease compared to a year ago when 2,419 further advances were agreed.

Details of equity release product features and pricing are available via the Autumn 2023 Market Report.

Market data

To view the following graphs download the Q3 data on PDF

Graph 1: Equity release customers numbers, by type of customer, Q1 2018 to Q3 2023

Graph 2: Number of new equity release plans agreed per month, July 2020 to September 2023

Source: Equity Release Council

About the data

For a comprehensive list of members, please visit the Council’s online member directory.

¹ Data sourced from Moneyfacts’ Equity Release Analyser.

²Office for National Statistics, UK House Price Index, August 2023, showing a 25% increase in average UK house prices from £233,536 in September 2019 to £291,000 in August 2023.

About the Equity Release Council

For more information:

Visit www.equityreleasecouncil.com

Email Instinctif Partners at [email protected]

Phone Andy Lane and Libby Wallis on +44 (0) 207 457 2020

Mortgage capital repayments at record high as borrowers adjust to higher rates

More than £21bn of mortgage capital is being paid off per quarter via regular repayments or overpayments, up from £17bn before the pandemic
New lifetime mortgage customers reduced their loan sizes in H1 2023, despite the average home holding over £222,000 of equity
Keeping up voluntary partial repayments of £2,500 per year could save the average lifetime mortgage customer nearly £70,000 over fifteen years

UK mortgage holders are repaying record amounts of mortgage debt in the higher interest rate environment, according to the Equity Release Council’s Autumn 2023 Market Report.

But high levels of debt and a lack of pension savings make it increasingly likely that homeowners will need to borrow against the value of their properties in later life to make ends meet.

The Council report explores the impact of higher interest rates on the lifetime mortgage and wider mortgage market during the first half of 2023.

It shows regular and one-off capital repayments across the mortgage market have totalled more than £21bn per quarter since Q4 2022, according to official data, up from £17bn before the pandemic*.

Total UK mortgage debt remained stubbornly high at £1.63tn in mid-2023. Despite this, the average home contains equity of £222,526: significantly more than the average pension**.

Lifetime mortgage customers show signs of caution

Among older homeowners already using lifetime mortgages to release equity from their homes, the Council’s data shows a shift in borrowing patterns during H1 2023.

Compared with a year earlier, the average new lump sum or drawdown lifetime mortgage customer withdrew a smaller amount of money and a smaller percentage of their overall housing wealth.

As well as a sign of customer caution, this has also resulted from lower maximum loan-to-values (LTVs) as providers have adjusted to higher interest rates.

Table 1: How new lifetime mortgage borrowing has adapted to higher interest rates

	Lump sum lifetime mortgages		Drawdown lifetime mortgages
	H1 2022	H1 2023	H1 2022	H1 2023
Property value	£423,556	£380,087	£441,270	£428,539
Rate	4.00%	6.66%	3.43%	6.28%
Loan	£132,085	£98,407	£134,692 with £92,580 upfront	£104,443 with £60,534 upfront
Loan-to-value	31.2%	25.9%	30.5%	24.4%

Source: Equity Release Council data

The Council’s data also shows customers continued to use the flexibility of voluntary penalty-free partial repayments when they can afford to. The average partial repayment was £2,527 in H1 2023.

If a new customer with a loan of £100,000 made this repayment every year over a 10-year period, they would reduce their borrowing costs by £37,845. Over 15 years, they would save £69,305.

All products that meet Council standards allow new customers to make voluntary partial repayments with no early repayment charge (ERC), typically up to 10% of the loan per year.

Table 2: How voluntary partial repayments can reduce lifetime mortgage costs

	Cost without voluntary repayments	Cost with voluntary repayments	Saving with voluntary repayments
10 years	£200,966	£163,121	£37,846
15 years	£284,895	£215,590	£69,305

Source: Equity Release Council analysis based on a loan of £100,000 at a rate of 7%

Lifetime mortgage rates have remained competitive

The lifetime mortgage market has not been alone in feeling the impact of higher interest rates. Data from Moneyfacts Group plc shows the uneven effect of rate rises has actually reduced the gap between lifetime and residential mortgage rates.

Ten years ago in 2013, the average lifetime mortgage rate was almost 3% higher than the average fixed rate residential mortgage. For most of 2022, the gap was more than 1.5% compared with the average two-year or five-year fixed rate mortgage.

Over summer 2023, this rate gap fell to less than 1% versus five-year products and less than 0.5% versus two-year products. While the trend reversed slightly during September 2023, lifetime mortgage rates have remained more competitive in relative terms than they were just a year ago.***

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

“The equity release market has shown a strong resolve to keep an important lifeline open to customers during a challenging period for the UK economy. People are taking smaller loans and a smaller percentage of their available equity. However, the stark outlook for people’s pension prospects means property wealth will remain a vital part of the equation to avoid a cost-of-retirement crisis.

“While mortgage pricing has jumped across the board, lifetime mortgage rates have weathered the storm better than some residential mortgages. The security and flexibility enshrined in Council standards include the ability to make voluntary partial repayments without the threat of their home being repossessed if repayments become unaffordable.

“Even before the current cycle of rising interest rates, many homeowners were facing the reality of carrying mortgage debt into later life. That is even more likely now, which is why we must double down on our work with industry and regulators to ensure all homeowners understand all their options and make the right informed choices.

“We are completely focused on ensuring that customers receive the right advice at the right time so they can make well-informed decisions, in line with the Consumer Duty. No-one should turn a blind eye to equity release as an option for their later life financial planning, and it’s important they work with Council members to weigh up its practical benefits against all potential alternatives.”

ENDS

Notes to Editors

* Equity Release Council analysis of data from the Bank of England

** Office for National Statistics, Pension wealth: wealth in Great Britain, January 2022

*** The Market Report sets out a number of design differences between lifetime and residential mortgages which are factors in the different pricing of these products. Additionally, the maximum LTV available to equity release customers is determined by applicants’ age, rather than the relationship between the property value and deposit size which is used for residential mortgages. The lifetime mortgage market offers lower maximum LTVs to customers than for residential mortgages, related to repayments being optional and interest otherwise rolling up over the duration of the loan.

About the Autumn 2023 Market Report

The Equity Release Market Report is designed and produced by Instinctif Partners on behalf of the Equity Release Council. It uses aggregated data supplied by all active provider members of the Council to create the most comprehensive view of consumer trends and product uptake across the equity release industry.

The latest edition was produced in Autumn 2023 using data from new plans taken out in the first half of 2023, alongside historic data and external sources as indicated. All figures quoted are aggregated for the whole market and do not represent the business of individual member firms.

About the Equity Release Council

For more information:

Visit www.equityreleasecouncil.com

Email Instinctif Partners at [email protected]

Phone Libby Wallis and Andy Lane on +44 (0) 207 457 2020

Cautious optimism’ as equity release activity picks up at the end of Q2

Equity Release Council: Q2 2023 equity release market statistics

Summary

The number of active customers in Q2 rose slightly to 17,028, up 2% from the previous quarter, despite remaining 29% down year-on-year.
Total lending of £664m was down 5% from the previous quarter, making it the quietest since Q3 2016 (£571m) for lending.
New customers increasingly opt for drawdown lifetime mortgages over lump sums compared with 12 months ago.
At £59,294, the average first instalment from a new drawdown plan was 35% lower than a year ago (£90,646 in Q2 2022) and the smallest since Q1 2017
April was the quietest month of Q2, with the number of new plans picking up in May and again in June as monthly activity reached its highest point of the year-to-date.

David Burrowes, Chair of the Equity Release Council, comments: “Higher interest rates have inevitably had a significant impact on the demand for lifetime mortgages like other mortgages, but the gap between residential and lifetime mortgage rates has narrowed over the last year.¹Equity release remains competitive and has lost none of the extra protections that have been added in recent years.

“Innovations in equity release can come into their own in a higher rate environment, with drawdowns allowing customers to take what they need in the short-term and make extra withdrawals in future if their circumstances change and interest rates fall. Optional repayments also give people freedom to keep their borrowing under control by limiting the effect of compound interest.

“The socio-economic factors for releasing equity remain. People are living longer, they are not saving enough for retirement and they want to help themselves and their loved ones to live more comfortable lives. We have seen steady growth in new customer activity in Q2, with June the busiest month of the year so far. While it is too early to call this as the start of the recovery, there is cause for cautious optimism and we remain confident in the strength of the market.

“Financial and legal advice remain vitally important to help customers understand their options. Equity release products are crucial in helping to meet current needs and avoid a later life lending drought, with higher interest rates and affordability tests making capital repayment or interest-only options harder for older borrowers to access.”

2.Key statistics for Q2 2023

Overall activity

A total of 17,028 new and returning customers used equity release products between April and June 2023 to unlock wealth from their homes. All new customers can benefit from being able to make penalty free partial repayments in future to reduce the effect of compound interest, without any obligation to repay the loan plus interest until they pass away or move into long term care.
The number of active customers this quarter was down 29% year-on-year from 23,910 in Q2 2022, although there was a slight increase (2%) from 16,691 in Q1 2023.
A total of £664m was unlocked by new and returning customers between April and June. This represents a fall of 5% on the previous quarter (£699m) and makes Q2 2023 the quietest lending period by this measure since Q3 2016 when £572m was accessed.

Trends among new customers

The number of new plans agreed for Q2 2023 was 6,682 down by 1% from 6,766 in the previous quarter and down 46% on an annual basis compared to Q2 2022 when 12,485 new plans were taken out.
New customer numbers fell to 2,004 in April from 2,384 in March, before recovering in May and June to 2,117 and 2,462 respectively. The uptick towards the end of the quarter suggests a level of certainty returning to the market, despite wider mortgage rate trends.
New customers were broadly split when it comes to product choice: 52% opted for drawdown lifetime mortgages, taking an initial withdrawal up-front with more held in reserve for future use, while 48% of customers opted for a single lump sum. One year ago in Q2 2022, the equivalent split was 45% drawdown and 55% lump sum.
The higher interest rate environment, coupled with lower maximum product loan-to-values (LTV) available, has seen customers reduce the amount they borrow. At £59,294, the average first withdrawal from a new drawdown plan represents a 35% decrease year-on-year from £90,646 in Q2 2022 and is the smallest amount seen since Q1 2017. This is despite UK house prices having risen by a third (33%) since March 2017.²
Having reduced their total loan sizes by 21% over the last year from £137,480 to £108,645 over the last year, new drawdown customers are now taking 55% of this sum up-front and saving the rest for future use, compared with taking 65% up-front in Q2 2022.
The average size of a new lump sum lifetime mortgage reduced by 29% year-on-year, with customers taking £94,266 between April and June compared to £132,331 a year earlier. This is the lowest amount since Q2 2019 (£93,712).

Trends among returning customers

With interest rates fixed or capped at the point of withdrawal for products which meet Equity Release Council standards, the number of drawdown customers making new withdrawals from existing loans rose marginally by 1% in Q2 2023 compared to Q1 2023.
However, the number of returning drawdown customers fell by 16% compared with Q2 2022, from 9,305 to 7,817.
Returning customers reduced their borrowing in Q2 compared to the previous quarter with the average returning drawdown customer taking £12,468 from their agreed reserves. This was 7% less than Q1 2023, and 8% less than in Q2 2022 when the average drawdown was £13,506.
The number of further advances (loan extensions) agreed on existing plans increased on the previous quarter, up 15% from 2,193 in Q1 2023 to 2,529 in Q2 2023. This is also a 19% rise compared to a year ago. This may be a sign of historic customers needing more funds in the current climate and finding their available equity has grown following recent house price gains.

Details of equity release products and pricing for Q2 are available via the Spring 2023 Market Report

3.Market data

Graph 1: Equity release customers numbers, by type of customer, Q1 2018 to Q2 2023

Graph 2: Number of new equity release plans agreed per month, April 2020 to June 2023

Source: Equity Release Council

4.About the data

For a comprehensive list of members, please visit the Council’s online member directory.

¹ Moneyfacts UK Mortgage Trends Treasury Report shows the average 2 year-fixed rate across all LTVs rose from 2.86% in April 2022 to 5.35% in April 2023 (+2.49), while the average 5-year fixed rate rose from 3.01% to 5.05% (+2.04). Over the same period, Equity Release Council analysis of Moneyfacts data shows the average equity release rate rose from 4.75% to 6.20% (+1.45).

²Office for National Statistics, UK House Price Index, May 2023, showing a 30% increase in average UK house prices from £215,236 in March 2017 to £286,000 in May 2023

5. About the Equity Release Council

The Equity Release Council is the representative trade body for the UK equity release sector with more than 750 member firms and 1,900 individuals registered, including providers, funders, regulated financial advisers, solicitors, surveyors and other professionals. It leads a consumer-focused UK based equity release market by setting authoritative standards and safeguards for the trusted provision of advice and products. Since 1991, more than 650,000 homeowners have accessed £46bn of property wealth via Council members to support their finances. The Council also works with government, voluntary and public sectors, and regulatory, consumer and professional bodies to inform and influence debate about the use of housing wealth in later life and retirement planning.

For more information:

Visit www.equityreleasecouncil.com

Email Instinctif Partners at [email protected]

Phone Jamie Till and Libby Wallis on +44 (0) 207 457 2020

Q1 2023 equity release market statistics

Equity release activity dips as market adjusts to higher interest rate environment

Summary

The number of new and returning equity release customers active between January and March this year dipped to 16,691, down 19% from 20,597 in Q4 2022 and down 29% from 23,395 a year earlier.
Total lending of £699m made Q1 2023 the quietest by this measure since Q2 2020.
New customers reduced their loan sizes in Q1 with the average first release from a new drawdown lifetime mortgage down 34% year-on-year to £61,785, the smallest seen in almost six years.
February was the quietest month of Q1 2023, with the number of new plans picking up in March, as product pricing continued to recover from its peak in November 2022.

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

“People have had to adjust to the realities of a higher interest-rate environment in many aspects of their personal finances.

“These figures show the equity release market has been no exception, although there are early signs, with decreasing rates and returning appetite, that a recovery is underway.

“Suitability and timing are everything when it comes to deciding to release equity. For some, it has made sense to continue with their plans.

“Other would-be customers have evidently been biding their time to see what interest rates do next.

“Homeowners with a present need have proceeded cautiously with average loan sizes at their lowest since 2017 in some cases, despite a 30% rise in house prices during that time.

“Anyone who unlocks money from their homes can do so safe in the knowledge that recent production innovations can work in their favour by giving them options to keep costs under control.

“Every product that meets Council standards allows people to make penalty-free partial loan repayments, reducing the build-up of interest.

“In addition, almost every product now offers early repayment charges that reduce to zero, making switching plans more practical in future if interest rates fall.

“Seeking advice from a Council member is essential to weigh up short and long-term considerations so that customers understand all their options and alternatives when making a plan.”

TO DOWNLOAD THE REPORT IN FULL CLICK HERE

Penalty-free repayments help 90,000 equity release customers cut their future interest costs by £116m

Equity release customers made 190,374 penalty-free repayments in 2022, up 48% from 2021
Partial repayments will save customers £116m in future by reducing compound interest
The Council’s analysis shows the average single pensioner could support a moderate lifestyle for 12 years by using equity release to boost their retirement income
Product availability and pricing gradually improving after the economic shocks of late 2022
Download the full Spring market report here.

The number of voluntary penalty-free partial repayments made by equity release customers grew by 48% last year, according to the Equity Release Council’s Spring market report.

More than 90,000 equity release customers reduced their loans by £102m in 2022 by making 190,374 partial repayments throughout the year, 48% more than were made in 2021.

By reducing their loans in this way, these customers stand to save a further £116m in future interest costs over the next 20 years.

Equity release allows older homeowners to access the wealth in their homes without having to repay the loan plus interest until they pass away or move into long-term care.

Making voluntary penalty-free part repayments was made a compulsory feature for all products that meet Equity Release Council standards from 28 March last year.

It means customers can choose to make repayments while they are still alive, reducing their interest costs and preserving more of their property wealth for future use or to pass on as an inheritance.

Raising later life living standards

The Market Report shows how homeowners are managing to improve their living standards in later life by drawing on property wealth to boost their existing income.

The Council’s analysis² shows the average single pensioner’s income falls just short of what is needed to support a minimum standard of living, as defined by the Pensions and Lifetime Savings Association’s Retirement Living Standards.

However, by boosting their income via equity release, they could afford a moderate lifestyle for 12 years or five years of living in comfort.

Similarly, the average pensioner couple could fund 18 years of moderate living or five years of living in comfort by topping up their income with the average equity release plan.

Product range recovering

The Market Report shows equity release activity reached record levels in H2 2022, despite the after-effects of the mini-Budget in September prompting a slowdown in Q4.

Since then, product pricing has fallen gradually over the last five months to an average of 6.23% at the start of April 2023, with advertised rates as low as 5.52%.

Product numbers have edged back towards 200, although maximum loan-to-values (LTVs) have been tightened from 47.0% in August 2022 to 38.7% in April 2023³.

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

“Modern equity release is an incredibly versatile product. People can choose whether they want to make repayments without fear of losing their homes, and since this feature was embedded into Equity Release Council standards, we have seen people’s usage grow and their interest savings add up. By making modest repayments when they can afford to, customers can benefit from their property wealth in the here-and-now while reducing their overall borrowing costs by tens of thousands of pounds.

“A nation where so many pensioners struggle to afford a moderate standard of living simply cannot ignore the potential for property to help bridge the gap. Equity release could make a decade of difference or more to someone whose pension income might otherwise only cover a basic lifestyle.

“The option of turning property wealth into pounds in their pocket has never been more important for consumers and our ageing society. As the market recovers from the economic shocks of late 2022, it is vital that people consider the role of their homes in covering the costs of later life.”

Q4 2022 equity release market statistics

Equity release market resumed historic growth path in 2022 before mini-Budget disruption in Q4

Please find the full report below.

2022 saw record activity with 93,421 new and returning customers choosing to access their property wealth via equity release products, up 23% year-on-year – the highest rate of growth since 2018
Total annual lending reached £6.2bn, a new high following the 30^th anniversary of voluntary regulation being introduced, up 29% from £4.8bn in 2021 and double the £3.06bn seen in 2017
Nearly 50,000 homeowners took out new plans, up 20% on 2021, with all new plans since 28 March 2022 guaranteeing customers the right to make voluntary penalty-free partial repayments to reduce interest costs
Activity dipped in Q4 as market disruption following September’s ‘mini-Budget’ prompted rate rises, reduced product availability and shook consumer confidence
December was the quietest month since before the Covid-19 pandemic as customers took stock at the end of the year, with loan sizes reduced in Q4.

David Burrowes, Chairman of the Equity Release Council, comments:

“We saw a glimpse of the equity release market’s potential in 2022 as it returned to its previous growth path* with a growing customer base making use of improved products and added protections. In a climate where retirement incomes have to stretch further for longer**, property wealth is as important to many people’s financial wellbeing as their pension.

“The unmet needs of the UK’s ageing population have seen the equity release market double in size since 2017, channelling decades of experience in helping older homeowners to gain financial freedom. Today’s equity release customers are more in control of their costs than ever before, with the right to make voluntary penalty-free partial repayments and the option of fixed early repayment charges which reduce to 0% over time

“Factors outside the industry’s control meant 2022 ended on an unusually quiet note in December, after the mini-Budget fuelled rate rises and tightening criteria. However, releasing equity is not a choice to make on a whim, and we are encouraged by signs that customers are pausing to assess their options. Seeking informed financial advice and independent legal advice from firms who sign up to Council standards is essential at the best of times, and more so now than ever.

“While some consumers may delay a decision about unlocking property wealth in 2023, many people will find that releasing equity is an appealing and essential step to move ahead with their lives and support their families’ needs.”

*See graph 1, new equity release plans agreed per year, 2012-21, and graph 2, annual equity release lending activity, 2012-22

** Pensions & Lifetime Savings Association, “Rising prices add almost 20% to “minimum” cost of retirement”, 12 January 2023

Key statistics for Q4 2022 and FY 2022

Overall activity

Across 2022, a total of 93,421 customers took out new plans, made use of drawdown facilities or agreed extensions to existing plans. This represents a year-on-year increase of 23% and surpasses by some margin the previous peak of 85,497 customers in 2019.
Total lending for 2022 reached £6.2bn, a 29% increase from £4.8bn in 2021 and a new annual record for the market. It means the equity release market has doubled in size over the last five years, having seen £3.06bn of annual lending in 2017.
During Q4, total new and returning equity release customers served reached 20,597, down from the record Q3 2022 figure of 25,591 but a modest 3% year-on-year rise from 19,975 in Q4 2021.
Customers borrowed £1.36bn of property wealth between October and December, marginally higher than £1.34bn one year earlier but down 20% from £1.71bn between July and September – bucking the usual trend whereby Q4 is the busiest quarter of the year.

Trends among new customers

2022 saw nearly 50,000 (49,285) new plans agreed, a 20% increase on the 2021 total of 40,964 and a new record figure, exceeding the previous high of 46,397 from 2018. Since 28 March 2022, all new plans have guaranteed customers the right to make voluntary penalty-free partial repayments without risking repossession if they cannot afford to do so.
11,174 new plans were agreed from October to December, down 17% from the previous quarter. This bucks the typical seasonal trend whereby Q4 is normally the busiest of the year, and reflects the sharp change in market conditions in the final months of 2022 following a period of gradually increasing interest rates earlier in the year
October was the busiest month of Q4 2022 for new plans agreed (4,736) as pipeline cases progressed from before the mini-Budget. In contrast, with just 2,074 new plans, December was not only the quietest month of Q4 but quieter than any month since before the Covid-19 pandemic broke out (the low-point of the pandemic having been May 2020 during the first UK lockdown when 2,229 new plans were completed).
Across 2022 as a whole, 52% of new customers opted for lump sum plans, up from 43% in the previous year. One factor in this is likely to be customers reaching the end of existing capital repayment or interest-only mortgages and seeking a way to remain in their homes without the risk of repossession that comes with fixed monthly repayment commitments.
While just over half of new customers in Q4 opted for lump sum lifetime mortgages over drawdown lifetime mortgages, both product types saw average loan sizes drop back. The average new lump sum plan was £128,382 in Q4, down 4% from £133,770 in Q3, while the average first instalment of a drawdown plan dropped 6% from £88,340 to £82,643.

Trends among returning customers

Over 2022 as a whole, the number of returning drawdown customers grew 16% from 2021 – compared with 20% growth in new plans agreed – while the smaller market for further advances grew 86%. Further advances accounted for 9% of customer numbers in 2022, up from 6% the previous year as existing customers found they were able to access more funds from their property within strict lending criteria.
The final three months of 2022 saw 7,071 existing customers make use of their drawdown facilities. This marks a 27% drop from the record high of Q3, and a smaller (7%) decrease from Q4 2021 as customers adopted a cautious approach. The average drawdown per customer in Q4 was £14,180, down 6% from the same period last year.
In contrast, further advance activity increased year-on-year in Q4, with 2,352 customers agreeing extensions to existing plans. This compared with 1,391 further advances customers in Q4 2021 but was down from 2,419 in Q3 2022.

Market data

Graph 1: New equity release plans agreed per year, 2012-22

Graph 2: Annual equity release lending activity, 2012-22

*Trend line based on a continuation of the market’s 2012-2018 trajectory

Graph 3: New equity release plans agreed per month, 2021-22

About the data

Q2 2022 equity release market statistics

Q2 2022 equity release market statistics.

Summary below, click here to download the report in full

Over 200 customers per day choose equity release to manage their finances as £1.6bn of property wealth is withdrawn in Q2 2022Over 200 customers per day choose equity release to manage their finances as £1.6bn of property wealth is withdrawn in Q2 2022
Homeowners aged 55+ took out 12,485 new equity release plans between April and June this year, equivalent to 205 new plans being agreed each working day.
The launch of the Council’s fifth product standard on 28 March means all new plans in Q2 came with the option for customers to make penalty-free partial repayments when they can afford to – allowing them to reduce their future interest costs with no requirement to make ongoing repayments.
The number of new plans agreed in Q2 increased 26% year-on-year when compared with the subdued market of Q2 2021 when pandemic restrictions remained in place but fell short of the peak of 12,891 recorded in Q4 2018.
New and returning customers withdrew £1.6bn of property wealth, with new plans sizes largely stable at around £135,000 while returning drawdown customers typically withdrew £13,506 each.
More new customers opted for lump sum lifetime mortgages over drawdown lifetime mortgages for the first time in 13 years, since Q1 2009, increasing from 45% of new plans in Q2 2021 to 54% now.
Council emphasises steps consumers can take to manage the cost of later life borrowing.

David Burrowes, Chair of the Equity Release Council, said: “The need to improve older people’s access to housing wealth was widely recognised by industry and policymakers long before the Covid-19 pandemic and current cost-of-living pressures emerged.

“The fact that hundreds of homeowners are now choosing to release equity each day, based on detailed financial and legal advice, is significant progress from the days when the market was considered an under-developed niche rather than the mainstream option it has become.

“Raising awareness of how modern equity release products work alongside other financial solutions is essential so people who are asset-rich but cash-poor can benefit from the wealth they have built up over their lifetimes and also support those around them.

“The recent trend towards lump sum products is likely to be influenced by customers’ continuing desire to gift money to younger family members and share their property wealth across generations, particularly if cost-of-living pressures are starting to bite.

“By making penalty-free partial loan repayments last year, customers reduced their future interest costs by tens of millions of pounds.

“The flexibility to make voluntary repayments, with no risk of repossession if they can’t afford to, is likely to be important to a growing number of people as they look to balance their books. The reality that interest rates have risen from historic lows will also impact people’s plans and the Council will monitor this closely as the year progresses.

“Today’s product range leaves a number of avenues open for customers to limit their overall borrowing costs². In every instance, expert advice and careful consideration are essential.”

Right to make repayments marks 30 years of standards for Council

Click here to read the report in full

New equity release customers will be able to mitigate the costs of borrowing in later life through a new product safeguard announced today by the Equity Release Council (the Council), the representative industry body.

From 28 March 2022, all customers taking out lifetime mortgages that meet Council standards will be guaranteed the right to make penalty free partial repayments of their loans.

It means new customers can not only reduce their borrowing, but offset the interest, without making any ongoing commitment to further repayments. The fifth product standard is being introduced to mark the 30th anniversary of consumer protections first established by the Council’s predecessor Safe Home Income Plans.

The Council is marking the occasion with the publication of a report, supported by Standard Life Home Finance, which explores the sector’s progress and evolution in the past three decades and sets out priorities for the year ahead.

Since 1991, more than 592,000 new equity release plans backed by Council standards have helped homeowners aged 55+ to access £38.7bn of property wealth to support their finances.

2021 saw the sector return to growth for the first time in three years with over 76,000 new and returning customers making use of equity release.

The industry and public figures featured in the anniversary report include Sir Hector Sants, Chair of the Money and Pensions Service; John Glen MP, Economic Secretary to the Treasury; Clive Betts MP, Chair of the House of Commons Levelling Up, Housing and Communities Committee; Rt Hon Damian Green MP, former First Secretary and current Chair of the All Party Parliamentary Group (APPG) on Longevity and Co-Chair of the APPG on Social Care; and Baroness Sally Greengross OBE, Chief Executive of the International Longevity Centre – UK and President of the Pensions Policy Institute.

In addition to the tenth edition of its standards, including the fifth product safeguard, the Council has also confirmed a number of planned initiatives for 2022.

These include establishing a Tech Forum and Legal Competency Framework to support practitioners. A series of member working groups will continue work to improve existing customer communications and review the presentation of information relating to fees and charges.

David Burrowes, Chairman of the Equity Release Council, comments: “Updating our standards to lock down the ability to make partial repayments on lifetime mortgages – an innovative feature that has become increasingly common in recent years – provides flexibility for consumers and ensures the sector continues to evolve to meet changing demographic needs.

“As recent years have reminded us, people’s circumstances can change and customers who find they can use earnings, savings or an inheritance to reduce their borrowing in later life will be able to do so without incurring early repayment charges.

“Introducing a fifth product standard is the latest milestone in a decades-long commitment to robust consumer safeguards. The ongoing process that started in 1991 has been key to building trust in equity release, which has become a multi-purpose product that is adaptable and adept in a variety of scenarios and contexts.

“The safeguards and standards the Council has worked to develop and uphold over the years will stand consumers in good stead as socio-economic factors give rise to a further increase in demand to access property wealth. The priorities we have set out today will help to further evolve the sector and provide good later life consumer outcomes.”

Kay Westgarth, Head of Sales at Standard Life Home Finance, comments: “Standard Life Home Finance is a relatively new entrant to this market, however we are building on the great work that the industry has done to raise standards, educate consumers and ensure it is possible for over-55s to safely access their housing equity. As an industry, we have come a long way in a relatively short period of time but there is always room for improvement.

“The introduction of a fifth standard is to be celebrated as it will allow customers to better manage their borrowing and ensure that products work for their individual circumstances. It is this type of innovation that will ensure we see another thirty years of growth and change for this vibrant market.”

Q2 2021 equity release market statistics

The Council has published its latest market data for Q2 2021.

To download the report in full click here.

Highlights of the report include:

Equity release activity nears pre-pandemic levels in Q2 as existing customers return.
20,352 new and returning customers accessed property wealth between April and June, edging closer to pre-pandemic activity levels as consumer confidence holds.
Drawdown lifetime mortgages remained the most common type of new plan agreed (55%), although more customers took out lump sums in June before the £500,000 Stamp Duty holiday ended.
Returning drawdown figures picked up the most during Q2 after many existing customers paused withdrawals in 2020.
Over-55 homeowners unlocked £1.17bn of property wealth in total during Q2 2021, up 2% from Q1 (£1.14bn) and up 67% (£698m) since a subdued Q2 last year during the first Covid-19 lockdown.

David Burrowes, Chairman of the Equity Release Council, comments:

“Judging by these latest figures, the equity release market is showing signs of stability and durability as the option to access property wealth opens doors for thousands of people to pursue their financial goals.
“We were accustomed to more than 20,000 new or returning customers releasing equity each quarter in the two years before Covid-19 struck. We’re now seeing activity levels steadily returning back to that status quo, with some existing customers returning to make withdrawals that were put on hold last year. The gradual recovery suggests people are carefully weighing up their circumstances and long-term needs, helped by specialist financial and legal advice, with speculation about a spike of activity during the pandemic so far proving unfounded.
“The steady recovery has been helped by confidence in the wider property market, where house price gains over the last year have given many homeowners more equity at their disposal. Equity release has become a socially important means for one generation to help another, as well as meeting later life financial needs. June’s Stamp Duty deadline will have prompted some older homeowners to pass on a ‘living inheritance’ so that younger family members can climb the property ladder.”

Q1 2021 equity release market statistics

Equity release market holds steady in the face of ongoing Covid lockdown measures

1. Summary

The first three months of 2021 saw £1.14bn released by 16,527 new or returning customers, a slight dip from £1.16bn from Q4 2020.
Figures represent a 7% rise year-on-year from £1.06bn in Q1 2020 as market and consumer confidence proves more robust than in the first lockdown
New customer activity in Q1 2021 cooled slightly, driven by seasonal trends amplified by renewed Covid-19 restrictions as the number of new plans edged down to 10,030 from 11,079 in Q1 2020
With lockdown restrictions tightened, February 2021 saw the fewest new plans agreed since June 2020 before modest growth returned in March
Figures come as the product choice for homeowners seeking to release equity reaches an all-time high, according to Moneyfacts

David Burrowes, Chairman of the Equity Release Council, comments:

“Despite ongoing uncertainty over the trajectory of the pandemic, this latest data for the early months of 2021 shows how the equity release market is following a steady course, albeit at a lower level than was the pre-Covid norm. The market has proven to be robust and applied lessons learned in the first lockdown to maintain access to property wealth for those customers who need it, guided by multi-layered financial and legal advice.

“Decisions to release equity are not made in isolation of wider developments in the property market. The resilience of house prices means that, for many older homeowners, property continues to be the most significant asset at their disposal and a viable route to boosting their income from pensions and savings, or gifting a ‘living inheritance’ to family members for their own use such as for a house deposit.”

“In the right circumstances, equity release is a flexible financial planning tool that can increase retirees’ options in later life. Property wealth has performed well even amid the economic disruption, and with the successful vaccination programme feeding through into consumer confidence, many people may be revisiting their financial priorities. It is vital to seek regulated financial advice and independent legal advice, ideally from Council members, to consider if equity release is right for you, or whether an alternative source of funds is more appropriate.”

2. Key statistics for Q1 2021

Overall activity

The total value of property wealth accessed by over-55 homeowners dipped slightly to £1.14bn in Q1 2021, from £1.16bn in the final quarter of 2020. However, the latest figure represents a 7% rise year-on-year from £1.06bn in Q1 2020.
16,527 new or returning customers were served during the first three months of 2021. This was down from 19,333 in Q4 2020, with normal seasonal trends accentuated by the return of strict lockdown restrictions.
However, overall customer numbers proved more resilient than during the first lockdown of Q2 2020, when just 13,617 new or returning customers withdrew equity from their properties.
Nevertheless, Q1 was the quietest start to a year for total customers served since Q2 2017, while the 5,566 returning drawdown customers was lower than at any point in the last four years.

Trends among new customers

10,030 new plans were agreed in Q1 2021, down from 11,566 in Q4 2020. However, it should be noted the Q4 total was likely to have been heightened by delayed cases filtering through from earlier in 2020 after the lifting of the first lockdown.
Product choices remained consistent with recent trends, as nearly three in five (58%) new customers opted for drawdown lifetime mortgages (vs. 57% in Q1 2020) and 42% opted for lump sum lifetime mortgages (vs. 43% in Q1 2020).
February saw the fewest new plans agreed (3,003) since June 2020, with activity cooling for four successive months having reached 4,161 in October 2020. This is likely to be linked to the tightening of lockdown restrictions during this period, with activity beginning to recover again in March when 3,727 new plans were agreed.
The average first instalment of a new drawdown lifetime mortgage reached £89,758, while the average new lump sum lifetime mortgage was £123,028. Member feedback suggests that increasing loan sizes can be attributed to a range of factors including:
- Customers taking advantage of having greater equity at their disposal as a result of rising property prices;
- Greater interest in releasing equity from wealthier customers with more valuable homes;
- Fewer customers using property wealth to fund smaller lifestyle purchases such as holidays during the pandemic, which reduces average loan sizes;
- More focus on repaying existing mortgage debt and gifting to family members to support their financial goals, including making their own house purchases while the current Stamp Duty holiday is available.

Trends among returning customers

Q1 2021 saw 5,566 existing customers with drawdown lifetime mortgages make use of their agreed reserves. This was down 18% quarter-on-quarter and 25% year-on-year as consumers acted conservatively rather than rushing to withdraw extra funds.
931 further advances were agreed between January and March enabling existing customers to access more property wealth. This was down from 1,000 in Q1 2020 and 975 in Q4 2020.
Barring the low of 668 seen during the first lockdown in Q2 2020, the number of further advances agreed was the lowest quarterly figure recorded in two and a half years since Q3 2018 (902).

3. Market data

Download the pdf for graph 1 which shows new equity release plans agreed per month, broken down by drawdown and lump sum lifetime mortgages – April 2020 to March 2021

Download the pdf for graph 2 which shows equity release customers numbers during Q1 2017-2021, broken down by type of customer (new, returning drawdown and those seeking further advances)

4. About the data

For a comprehensive list of members, please visit the Council’s online member directory.

Spring market report 2021

UK property wealth reaches a record £4.6trillion as lifetime mortgage availability and average rates break new ground

The Council has published its 2021 Spring market report

To download a copy click here. To download a media alert click here.

A summary appears below.

Summary

UK property wealth reaches a record £4.6trillion as lifetime mortgage availability and average rates break new ground

The total value of UK private property passed £6 trillion for the first time at the end of 2020
Total national mortgage debt continues to rise towards a record £1.5 trillion, but the average loan to value (LTV) falls to the lowest level since before 2007/8
The number of equity release products available to consumers rose to record highs with 100 new products added in H2 – a total of 488 products were available by the end of 2020
Access to retirement interest-only mortgages also improved last year with more than 100 products available for the first time
The average lifetime mortgage product rate reached a record low of 3.95% in January 2021, with a quarter of products now offering rates of 3% or lower
The volume of new equity release plans taken out rose 19% during H2 2020, compared to the first six months of the year as consumer confidence and businesses showed resilience
Over-55s withdrew 46p of property wealth for every £1 of flexible pension payments in H2 2020, in line with 2019 as property plays an important role in the retirement funding mix.

David Burrowes, Chair of the Equity Release Council said:

“After the unprecedented upheaval of early 2020, the equity release market showed signs of recovery as households and businesses remained resilient against a challenging backdrop. Property wealth ranks second only to pensions in terms of its importance to household finances across the country. The transformation of later life mortgage products in recent years has given people more opportunities to access property wealth at affordable rates.

“Accessing property wealth will play a vital role in retirement planning, both now and in the years to come. For today’s retirees, it can make the difference between making ends meet or enjoying a more comfortable lifestyle by boosting their pension income, improving or adapting their homes life and paying for domestic care support. For younger generations, it can open up the possibility of receiving a ‘living inheritance’ to support their own financial goals, such as getting on the property ladder.

“2021 is a milestone year that marks the 30th anniversary of the first equity release standards. Today’s market has added choice and flexibility to the robust protections and guarantees that give consumers confidence that modern equity release is safe and reliable. We will continue to work with industry, government, policymakers, regulators and consumer bodies to ensure the products and advice available continue to serve customers’ changing needs.”

Pandemic leaves two in three over 50s determined to receive care at home

Equity Release Council publishes report, ‘Solving the social care funding crisis: perspectives on the contribution of property wealth’

• 60% of over-50s fearful of having to move into residential care homes
• Over one in five adults (22%) admit they did not know that many people have to pay towards the cost of social care
• Half (50%) have not thought about how to pay for future care needs, while only 12% of the over-50s have made any plans or provisions
• 4.1m people and their families have had to sell a parent or elderly relative’s home to pay for care needs
• 47% believe everyone should have access to state funded care provision with the option to top this up from their own funds

The impact of Covid-19 on Britain’s social care system has left two in three (67%) over-50s determined to stay living in their own home if they ever need care in future, according to a new report which lays bare the extent of public concern and confusion over the cost of later life care.

The report, published today by the Equity Release Council with Pure Retirement and My Care Consultant, shows the pressures of the pandemic have left a majority of UK adults concerned that care is too expensive (63%), lacking in public funds (64%) and not fit for purpose (57%).

Three in five (60%) over-50s say they are fearful of having to move into residential settings. The determination to receive care at home grows stronger with age, rising to 76% among over-70s.
The findings also show over one in five (22%) adults are unaware that many people have to contribute to social care costs in later life, rather than being free at the point of use like most NHS services.

Half of the adult population (50%) have not considered how they will pay for long-term care needs. Fewer than one in five (18%) have made any provisions for this at all.

The lack of preparedness is even more acute for older age groups: 55% of over-50s have not thought about paying for care and only 12% have put plans in place.
Millions of families compromising on care

The Equity Release Council report – Solving the social care funding crisis: perspectives on the contribution of property wealth – features insights from figures in politics, academia and financial services on the role of property wealth in supporting a broader, sustainable care funding solution.

It considers the role of public and private sectors in meeting growing demand, the benefits of later life lending product developments, and the importance of specialist financial and legal advice when dealing with a complex system and clients in potentially vulnerable situations.

Policymakers have debated a range of care funding solutions over the last decade, including caps on care costs, a social insurance fund, a National Care Service and higher taxes. Just last week the Government published its blueprint to integrate health and social care services and has pledged to bring forward proposals for broader social care reforms this year.

The Council’s research suggests nearly half of UK adults (47%) feel state funded care should be available for everyone to access, up to a certain point, with the option to top this up using their own finances. Fewer people (40%) believe care should be completely free at the point of use, while only 4% believe care should be completely self-funded.

The findings also highlight that under the current system:

5.5m people and their families (10.2%) have had to use their own income or savings to pay for a parent or elderly relative’s care
4.6m (8.6%) have had to provide care within the family due to financial pressures
4.1m (7.7%) people and their families have had to sell a parent or elderly relative’s home to pay for care needs
4.0m (7.5%) have had to compromise on low quality care for a parent or elderly relative because they could not afford any better.

Contributions to the report include:

Finding a sustainable solution for adult social care funding – Jim Boyd, CEO of the Equity Release Council and Chair of the Council’s Long Term Care Working Group
How can we pay for social care fairly? – Rt Hon Damian Green, MP for Ashford
Opportunities and challenges for equity release to fund adult social care – Dr Louise Overton, University of Birmingham
Asset rich and cash poor – could equity release bridge the gap to help fund care? Paul Carter, CEO of Pure Retirement
Care in crisis and the need for clarity, guidance and advice – Jacqueline Berry, Managing Director of My Care Consultant
Why independent legal advice is vital for clients in the care process – Peter Barton, Head of Equity Release at Ashfords.

David Burrowes, Chairman of the Equity Release Council, commented: “The country is crying out for a care funding plan that is fair for all and sustainable in the long-term. We welcome the Government’s commitment to progress social care reforms this year to help people live independent lives for longer. With this issue firmly back at the top of the agenda, we urge Government to bring forward solutions that can make state-funded care available to all, up to a point, with people using their own funds and assets to top this up where needed. We also need to ensure that care provision can support people’s desire to have their needs met in the sanctuary of their own homes. Property wealth can play an important role in resolving this generational crisis. The ability for people to access some of the money tied up in their homes can help realise their ambition to live there independently for longer, by funding extra homecare services, new technologies or making home adaptations.”

Paul Carter, CEO, Pure Retirement, commented: “We’re increasingly seeing a landscape where retirees are asset rich and cash poor, which could have major implications in the way that people fund their care needs in later life. It’s been great to work with people from across a number of related sectors exploring the potential relationship between later life lending and long-term care, with a view to shedding light on potential funding avenues for those needing care in the future.”

Jacqueline Berry, Managing Director, My Care Consultant added: “As we await the pledge by the government to ‘fix care’ once and for all, it’s more than likely that most will still have to pay something towards their care if they are to get the level of care they want. With residential property being the biggest asset for many, we feel this report is both important and timely.”

Half of women approaching retirement are worried about running out of money in later life

Proportion of over-55s worried about running out of money in retirement increases to over a third (34%) over the last year
While concerns are rising fastest among men, working women remain the most anxious (48%)
Women are also less likely to consider alternative sources of later life funding
Almost half (48%) are worried about falling ill and having to pay for care

Women approaching retirement are facing a confidence conundrum: they are the most anxious about being able to afford a comfortable retirement yet are the least likely to consider alternative funding options to plug the gap.

A new report published today by the Equity Release Council (the Council) and Key – Pension / Property Paradox: revisiting the retirement confidence gap – looks at trends in older homeowners’ retirement financial plans and confidence levels over the last year.

It reveals the proportion of homeowners aged 55+ worried about running out of money in retirement has increased to over a third (34%), up from 27% a year earlier. Notably, these concerns are rising fastest among men, up nine percentage points over the last year to 32%.

However, women who are still working remain the most anxious (48%) – the highest proportion of any group in the study.

The research also highlights that women feel they have less power over choosing when they can retire. Less than half (41%) women still working are confident they will be able to afford to choose when they retire, compared to a majority (56%) of men still working.

To download the full press release click here.

To download full report click click here.

Autumn market report: Equity release market continues to evolve with average interest rates reaching historic lows

Summary

Average rates for equity release products reached record lows of 4.11% in July 2020, with over half of products offering a rate of 4% or lower, and a fifth offering rates below 3%
Equity release rates fell further than other personal borrowing products – mortgages, personal loans, credit cards and overdrafts – over both a one-and two- year period
Product choice for consumers was up 29% from July 2019 and by 88% since the start of 2019, despite a 5% reduction in product numbers from 401 to 379 between January and July 2020
Impact of Covid-19 felt in Q2, as the first half of 2020 saw an overall 14% drop in customer activity from the same period last year and a 15% drop in new plans agreed
Recent ONS data shows more than one in three (37%) people aged 65+ are worried they will not be able to maintain their living standards in retirement [y]
The ONS data also shows more than a third (39%) of baby boomers (aged 65+) believe property would make the most of their money in retirement [y]

David Burrowes, Chairman of the Equity Release Council comments: “The unprecedented uncertainty of the first six months of 2020 has affected households and businesses alike, with the equity release market no exception. While pent-up demand in Q1 led to a strong first quarter, the impact of Covid-19 and the lockdown dominated Q2 before showing initial signs of recovery in June.

“Despite this uncertainty, the market has shown resilience and consumers considering equity release continue to find a wide range of product options on the market, while the average rate has fallen considerably over the last eighteen months.

“As the UK’s ageing population seeks to fund increasingly longer retirements, property wealth can play a fundamental role for many people, both now and in the future, as part of a more joined-up approach to planning for retirement. The challenges that lie ahead show no signs of easing, so it is important that people are aware of all the options available to them to help fund later life.

“We believe the robust standards upheld by the Council, which were evolved last year to be outcomes-focused, provide the highest level of consumer protection of any later life property-based loan. Looking ahead, we are committed, now more than ever before, to working with members, industry, government, and regulators to ensure the best possible consumer outcomes.”

To view the full press release including the data tables download the Autumn 2020 Market Report – Media Alert or download the full Autumn 2020 Market Report

Equity Release Council: Q2 2020 equity release market statistics

1. Summary

Equity release market saw initial recovery signs in June after Q2 activity fell by a third £698m of property wealth was accessed by older homeowners in Q2 2020, down by 34% – almost £400m – from the previous quarter.
The fall reflected wider lending trends – Bank of England data for April and May shows gross lending secured on dwellings was down 36% from February and March*.
The number of new equity release plans agreed between April and June also declined by 34% from 11,079 in Q1 2020 to 7,341. May was the quietest month for new plans before initial signs of recovery followed in June as lockdown conditions began to ease.
Customers held back from making further drawdowns from existing plans or seeking further advances as they waited to see the long-term impact of Covid-19.

David Burrowes, Chairman of the Equity Release Council, said: “Equity release market activity continued to mirror wider economic conditions, with the confidence of early 2020 giving way to caution as households assess the impact of coronavirus on everyday life.

“Careful precautions have kept the market open to those who wish to choose the option of equity release and ensured customers have access to property wealth to help meet important financial and social needs. That said, the fall in the number of new plans and fewer returning customers accessing extra funds are clear signs of people pausing to see how the wider situation unfolds.

“Property assets have long been one of the nation’s main sources of wealth and are likely to play an increasingly important role to support people when addressing the challenges facing many in later life, including bridging the savings gap for older homeowners who are asset rich but cash poor.

“Releasing equity is not a suitable choice for everyone, and our focus is on ensuring customers’ interests are protected at every stage of the process through structured financial advice, independent legal advice and clear product safeguards.”

2. Key statistics for Q2 2020

Overall activity

The 7,341 new equity release plans taken out between April and June was the lowest seen in any quarter in the last four years since Q2 2016 (6,671), down from 11,079 in Q1 2020.
The total number of customers (new and returning) served in Q2 2020 was 13,617, down from 21,884 in Q1 2020 (-38%) and 20,866 in Q2 2019 (-35%).
£698m of property wealth was accessed by new and returning customers, a reduction of almost £400m from £1.064bn in Q1 2020. Monthly trends
May was the quietest month for new plans agreed, with just 2,229 completions compared to an average of 3,693 per month during Q1 2020 (a 40% drop).
April’s total of 2,533 new plans completed was likely to result from cases arranged earlier in the year, before the nationwide lockdown came into effect in late March.
With England’s housing market reopening in mid-May, the number of new plans completed recovered slightly in June to 2,579, but remained 30% down on the average monthly figure from Q1.

Trends among new customers

Lump sum lifetime mortgages made up a 45% share of new plans arranged in Q2 2020, compared to a 43% share in Q1 2020.
Among the 3,328 new lump sum lifetime mortgages taken out (down 31% from the previous quarter), the average loan size dipped below £100,000 for the first time since Q3 2019 to to £99,959
Drawdown lifetime mortgages remained the most popular type of new plan agreed, albeit with a lower share (55%) of new customer activity than the previous quarter (57%).
Among the 4,011 new drawdown plans taken out (down 36% from the previous quarter), the average first instalment (£68,606) was virtually unchanged from Q1 (£68,492). The average amount reserved for future use (£37,500) was 4% lower than in Q1.

Trends among returning customers

Q2 2020 saw 5,608 customers returning to take extra drawdowns from their agreed reserves, compared to 9,805 in the previous quarter, as people exercised caution before making use of the option to access further funds. This is a 43% decrease from Q1 to Q2, compared with the 34% decrease in new customers served.
The average drawdown instalment taken was £13,005 in Q2, compared with £11,611 in Q1.
Further advance activity was also considerably quieter, with just 668 existing customers agreeing additional funds – the lowest number since Q1 2017.

3. Please download the PDF version to view the following the data tables click here: 200728 Equity Release Council Q2 2020 market statistics – media alert – final

Graph 1: Total number of new equity release plans taken out by quarter, Q2 2017-Q2 2020

Table 1: Average amounts of property wealth accessed by equity release customers, Q2 2020

Please note: Due to being a smaller segment of the market and number of plans involved, fluctuations in home reversion plans figures are common.

4. About the data

The Equity Release Council’s market statistics are compiled from member activity, including all national providers in the equity release market. This latest edition was produced in July 2020 using data from customer activity during the second quarter of this year (April to June). All figures quoted are aggregated for the whole market and do not represent the business of individual member firms. Equity release products are available to homeowners aged 55+, enabling them to release money from the value of their home following a regulated process of financial advice and independent legal advice to determine whether this is suitable for their individual circumstances and long-term needs. Funds released are typically used for a range of purposes including providing additional retirement income, funding one-off expenses and lifestyle purchases, consolidating debts, meeting homecare costs and gifting a ‘living inheritance’ to family or friends. For a comprehensive list of members, please visit the Council’s online member directory.

*Bank of England Money and Credit Series data, comparing February-March to April-May 2020.

5. About the Equity Release Council

The Equity Release Council is the representative trade body for the UK equity release sector with over 500 member firms and nearly 1,300 individuals registered, including providers, funders, regulated financial advisers, solicitors, surveyors and other professionals. It leads a consumer-focused UK based equity release market by setting authoritative standards and safeguards for the trusted provision of advice and products. Since 1991, over 500,000 homeowners have accessed over £30bn of property wealth via Council members to support their finances. The Council also works with government, voluntary and public sectors, and regulatory, consumer and professional bodies to inform and influence debate about the use of property wealth in later life and retirement planning.

To download the full press release including tables click here 200728 Equity Release Council Q2 2020 market statistics – media alert – final.

2019 was a year of consolidation as equity release lending remains at £3.9 billion

A total of £3.92 billion of housing equity was withdrawn by older homeowners in 2019, in line with last year’s total of £3.94bn, as the market consolidated recent growth
Market has grown almost four-fold in the last decade, with the annual value unlocked rising from £945.97 million (2009) to £3.92 billion (2019)
Total number of customers served remained high, with 85,497 older homeowners using their property wealth in 2019

Customers took advantage of record low rates and increasing product flexibilities to access £3.92 billion of property wealth in 2019 despite a cautious economic climate, according to year-end market figures from the Equity Release Council, the sector trade body.

The market has witnessed steady growth in the space of a decade, with the amount accessed by older homeowners per year growing from £945.97 million (2009) to £3.92 billion by 2019, representing an almost four-fold increase over the course of the decade. However, last year saw the market consolidate its growth, with lending volumes remaining largely unchanged since 2018 when £3.94bn was unlocked.

The final quarter of 2019 was the busiest period of the year, with more than £1 billion unlocked in Q4 alone. Moreover, it was also one of the busiest quarters on record, second only to Q4 2018 when lending volumes were just 0.1% higher.

Consistently strong consumer demand

Consumer demand continued to grow as older homeowners recognised the crucial role that property wealth can play in supporting their retirement alongside pensions, savings and other assets. 2019 saw the total number of customers served reach a record high of 85,497, of which 44,870 took out new plans (compared to 46, 297 in 2018) following a detailed process of regulated financial and independent legal advice.

Increased product features and flexibilities, such as the ability to make voluntary or partial repayments with no early repayment charge, has helped fuel this long-term growth in product uptake. Additionally, the Council’s Autumn 2019 Market Report showed that the average interest rate dropped to a record low of 4.91% in September 2019, partly the result of increased competition across the market.

The number of returning drawdown customers also increased by 3,676 over the course of the year, up by 11%, while the number of further advances/releases increased by 557 (15% increase), suggesting borrowers are unlocking conservative amounts and only returning should they need to access further sums.

Average withdrawals remain stable year-on-year

The most popular product amongst older homeowners continues to be drawdown mortgages, with nearly two in three (64%) new customers opting for a drawdown product versus a lump sum product.

Furthermore, while the customer base has grown to new levels, the average amounts withdrawn by homeowners have remained steady as customers are advised to unlock values appropriate for their foreseeable financial needs.

During 2019, average withdrawals from new drawdown lifetime mortgages remained broadly consistent with 2018, with the average customer unlocking £63,963 – double the annual income of a retired couple. The average new lump sum customer unlocked £97,282, triple (3.1) the annual income of a retired couple, and a modest increase of 2.4% from 2018’s average withdrawal

Average new plan withdrawals

The average new plan for lump sum lifetime mortgages was £97,282, up 2.4% on 2018. The average drawdown lifetime mortgage new plan was £63,693, down 0.5% on 2018.

Standards evolve alongside market consolidation

Alongside this market consolidation, the Council recently evolved its standards to introduce an approach based on principles and consumer outcomes, which reflects the latest thinking in financial services regulation and complements the existing rules, safeguards and protections.

These updated standards, which represent the largest evolution since the organisation was established in 2012, build on the work which began in 1991 when clear consumer-focused equity release product standards were first introduced. This sets the benchmark for best practice by providing a higher level of consumer protection than any other form of property based loan.

David Burrowes, Chairman of the Equity Release Council said: “After a period of steady growth, the market has reached a point of consolidation in 2019 with lending volumes in line with 2018. The sector enters 2020 in a strong position with updated standards and a greater number of diverse members signed up than ever before. Looking ahead, we’ll continue to work with stakeholders to ensure consumers are able to access the best advice while ensuring joined up financial planning so that equity release remains a key consideration in mainstream retirement planning.

“Previously viewed as a niche product to support people’s retirement plans, the untapped potential of equity release is now being recognised. This comes as a growing number of customers are recognising the important role property wealth can play in meeting their retirement needs. This has been driven by competition, falling interest rates, increasing numbers of flexible and innovative product options and supported by rigorous standards in the market.”

Autumn market report 2019: product trends revealed as sector flexes with consumer demand

Equity release customers see unprecedented levels of product choice and flexibility in the first six months of 2019
Top growth areas over the past year include options for sheltered or age-restricted accommodation, making regular interest payments, downsizing protection, inheritance guarantees and drawdown facilities
Average equity release rates fell below 5% for the first time to 4.91% in July 2019
The market has continued to develop and mature in recent years, energised by strong competition in the market and underpinned by robust consumer safeguards

Equity release customers saw unprecedented levels of product choice and flexibility in the first six months of 2019, according to the Equity Release Council’s Autumn 2019 Market Report1. This comes as a total of £1.85bn in housing wealth was unlocked in H1 2019 by homeowners aged 55+ to support their later life financial planning.

In a sign that the industry continues to respond to consumer demand for more flexibility and choice, the range of product options increased two-fold compared to this time last year to almost 300 options.

Energised by strong competition in the market and consumer demand, there has been continued growth across all product features – underpinned by Equity Release Council standards guaranteeing three levels of protection including product safeguards, regulated financial advice and independent legal advice.

The top growth areas over the last year include options for sheltered or age-restricted accommodation, interest-serviced (regular interest payments) options, downsizing protection, inheritance guarantees and drawdown facilities.

Table one: Equity release product options and features:

	Product options with this feature – August 2018	Product options with this feature – August 2019	Annual change (%)
Sheltered/age restricted accommodation	42	155	269%
Interest-serviced (regular interest payments)	22	81	268%
Downsizing protection	63	129	105%
Inheritance guarantee	51	96	88%
Drawdown facilities	47	88	87%
Voluntary/partial repayments with no early repayment charge	99	178	80%
Fixed early repayment charges	75	116	55%
Regular income payments*	0	16	n/a
Total product options	126	287	128%

Source: product data supplied by Key, August 2019

*Products offering the regular income payments feature were introduced to market January 2019.

Product options offering the ability to make regular interest payments increased to 81 in August 2019, up 80% since the start of the year and almost quadrupling year-on-year. This feature helps reduce the build-up of interest in the long run. Unlike other retirement mortgage products, customers can pay interest in part or in full without the risk of repossession if payments are no longer affordable, with the option of switching to roll-up at any point.

There has also been a notable annual rise in product options available on sheltered and/or age restricted accommodation (269%), while the range of options offering downsizing protection have doubled. This feature allows customers to downsize and repay their loan without incurring an early repayment charge – a key consideration in later life.

Products offering inheritance guarantees have seen an 88% year-on-year increase. This gives customers the option to ring-fence part of their property’s value to leave behind as a guaranteed minimum inheritance.

Average equity release rates fall below 5% for first time

The Market Report also shows the average equity release rate at a record low of 4.91%3. Over half (58%) of products offer a rate of 5% or less, while a fifth (21%) of products are priced at 4% or below – with these rates being fixed or capped at a maximum limit for the entire life of the loan.

This growing product range with increasingly competitive rates comes at a time there are an estimated 20.5 million people aged 55+ in the UK, including 1.6 million aged 85+4, with those who own their home outright aged 67.75 on average. This is approaching the typical age that customers take out equity release – averaging 70.3 years for new drawdown plans and 68.0 for new lump sum plans. This comes as over half (51%) of homeowners aged 45+ see money invested in property as part of their financial plans for later life6.

David Burrowes, Chairman of the Equity Release Council comments: “The equity release market is responding to consumer demand as it continues to evolve and grow. Increased product innovation and flexibilities are helping to meet wide range of financial and social needs, from providing extra retirement income to passing on wealth to younger generations.

“Older homeowners considering equity release have never before had more choice and flexibility to meet their changing needs and their families’, with average rates also at record lows. A broader range of products means equity release can play an important part of advisers’ toolkit when considering clients’ requirements in later life. It’s vital that advisers across a host of areas – including pensions and wealth management – can identify when equity release may or may not be suitable based on today’s product range and can refer a client for specialist advice where appropriate.

“The market’s development has been driven by competition, reinforced by robust consumer protections and product safeguards. As the UK’s ageing population continues to grow, making use of housing wealth will be essential to help all generations meet the financial challenges they’re facing both today and tomorrow.”

ENDS

Click here to download the full Autumn Market Report 2019 .

1.The Equity Release Market Report uses aggregated data supplied by all active provider members of the Council to create the most comprehensive view of consumer trends and product uptake across the equity release industry.

The latest edition was produced in Autumn 2019 using data from new plans taken out in the first half of 2019, alongside historic data and external sources as indicated in the report. All figures quoted are aggregated for the whole market and do not represent the business of individual member firms.

For a comprehensive list of members, please visit the Council’s online member directory.

2. Equity release product features explained:

Product features explained

Regular income – some lifetime mortgages now provide a regular monthly payment over a fixed period, in place of a larger lump sum, for example to boost income received from pensions and other sources
Voluntary/partial repayments – allows ad hoc or regular repayments to be made, typically up to 10% of the initial loan per year, with no early repayment charge (ERC). Helps customers to minimise the build-up of interest and even reduce the loan over time.
Drawdown facilities – allows customers to withdraw money in stages rather than taking a single amount all in one go. Interest is only applied when it is withdrawn – keeping costs down.
Inheritance guarantee – reduces the maximum loan amount but enables a fixed percentage of the property value to be ring-fenced as a minimum inheritance, regardless of the total interest accrued by the loan.
Fixed ERC – early repayment charges which are a fixed percentage of the initial loan during a set period of time. Typically, they decrease on a sliding scale. Once the fixed period has ended the customer can repay the loan in full without an ERC.
Downsizing protection – allows customers to downsize to a smaller property and repay the loan – either voluntarily or if the new property does not fit providers’ criteria – without incurring an ERC. Typically there is a qualifying period of five years before this feature applies.
Sheltered/age restricted accommodation – some plans can be secured against sheltered or age restricted properties, subject to the provider ’s specific criteria at the time.
Interest payments – allows for either full or partial interest repayments to be made each month, which either stops or reduces the interest being rolled up on to the loan. There is no risk of repossession if payments are missed as customers can stop monthly interest payments and revert to interest roll-up at any time.
Repayment flexibilities for significant life events and changes of circumstance – a number of lenders have now introduced a feature for joint borrowers whereby, if either one passes away or moves permanently into long term care, the borrower/s can repay the loan within three years if they wish to do so without any early repayment charge.

Lifetime mortgage rates reflect the additional features and protections offered above and beyond typical homeowner mortgages. For products offered by Council members, this involves: a guaranteed fixed or capped rate of interest for an indefinite term until the plan is repaid, typically when the customer passes away or moves into permanent care; the continuing right to tenure without regular repayments being required; and protection for the customer against negative equity with the provider absorbing this risk.

3. as of July 2019

4. Office for National Statistics, Estimates of the population of the UK, England and Wales, Scotland and Northern Ireland, June 2019

5. Ministry of Housing, Communities and Local Government, English Housing Survey data on homeownership for 2017/18, 2016/17

6. Equity Release Council report – Beyond bricks and mortar: the changing role of property in later life financial plans – supported by Key