The Council recently published its Q2 2023 market data. It shows equity release lending increased throughout Q2, but total lending of £664m was down 5% from the previous quarter. To view the data click here and see what some of the industry’s experts had to say below.
Craig Brown, CEO, Legal & General Home Finance said: “It is interesting to note that the Equity Release Council’s data shows customers taking a cautious approach in the current market, with an increase in people turning to drawdown products rather a lump sum. The ability to drawdown in stages gives homeowners control, something Legal & General has taken initiative towards and strived to make more accessible, to ensure our customers borrow what they need, when they need it. In line with that, we recently reduced our minimum drawdown amount to £1,000 to help as many people as possible wishing to use their property to meet their retirement needs.”
“We know that lifetime mortgages support a range of needs, including gifting funds to support loved ones. Our most recent internal data also showed that home improvements are still the most popular use of funds, helping those in later life stay in their forever homes.”
Paul Glynn, CEO, Air said: “The market mood music has settled into a more comfortable groove, with the number of active customers up by 2% and £664 million unlocked by new and returning customers in Q2 2023. While this is down on the records seen last year, this still suggests a market which is successfully weathering the turbulence seen across the residential property sector in the last 12 months. 
“We are seeing green shoots but they will not grow without considered effort and input from across the industry. Whether it is lenders looking to innovate or advisers considering how they use tools to adapt their systems and processes to provide customers with good outcomes, there is a lot of work still to do – especially having hit the Consumer Duty deadline.
“Key to this will be to build customer confidence and help them to understand that even in a higher interest rate environment, modern later life lending products can be the right solution to the challenges they are facing.”
Simon Gray, managing director, HUB Financial Solutions said: “This update from the Equity Release Council usefully highlights how the range and flexibility of modern equity release products continue to help people achieve their financial goals, despite the changed economic environment and higher interest rates of recent months.
“For many customers, their needs have not changed and equity release remains a powerful tool to help them generate a significant lump-sum and maintain or top up their income in retirement.
“It’s in more challenging economic times that the value of high-quality professional advice is clearly seen, as it ensures people think carefully about what their goals are and the best ways to achieve them.
“Many people are not in a position to delay decisions or to wait for the market to achieve some kind of ‘new normal’ and for these customers high quality advice will help them make decisions now that will stand them in good stead for the months and years ahead.”
Will Hale, CEO, Key said: “Today’s Equity Release Council figures echo our own Market Monitor which suggests that the market is down as we continue to manage the challenges created by a high inflation rate environment and the Mini-budget at the end of last year.
“That said, there are early signs that the market is starting to gain positive momentum and that customers are becoming more accepting of the new normal. Rates are higher than they have been for several years but the same is true of residential mortgages. Indeed, the difference in average rates for lifetime mortgages and standard two-year or five-year fixed rate mortgages is narrower than ever before. 
“Rates on typical equity release plans, which are fixed for life, are substantially below the average mortgage SVR of 8.49% as well as offering additional safeguards such as surety of tenure and a no negative equity guarantee. As we enter the new dawn of Consumer Duty, the sector can be confident of the value being provided to customers in our target market.
“Furthermore, the increasingly flexible nature of equity release, including features which encourage ad hoc repayments as well as the servicing of interest, now make the products suitable for a broad profile of older homeowners by enabling them to make active choices around their borrowing through later life. Against this backdrop, we have seen a slight increase in the number of people using equity release for more discretionary purposes and the discussions around the use of housing equity becoming more common in wider advice conversations.
“Looking to H2 2023, I firmly believe that we will see a more buoyant market based on increased customer demand. How we service this demand will be vital and I envisage more innovation in products and advice propositions to ensure that good customer outcomes are achieved.”
Stephen Lowe, group communications director, Just Group said: “The equity release market has had a long period of growth, but like the mainstream mortgage market it is not immune to the changing economic situation and the recent hikes in interest rates that are making many people look closely at their financial decisions.
“June saw the highest level of new plans in the market this year as activity increased from a quiet April. Customers are taking advantage of the flexibility a drawdown facility offers, to manage the interest on the loan by taking only what they absolutely need now and leaving themselves with the option to draw further funds as they need in the future.
“For many people, their house is their single most valuable asset and this underlines the role of equity release in wider financial planning. Property can be used to help people generate significant capital sums and sustain or improve people’s incomes in retirement.
“As always, high quality professional advice is essential to helping people decide if equity release is right for them and, if so, to make sure they select the best options for their own particular circumstances.”
Ben Waugh, managing director, more2life said: “While total lending fell slightly to £664m in Q2, the market has certainly settled into a more optimistic position than it was in at the start of the year. Rising interest rates contributed to a foreseeable drop in new plans, but encouragingly the Equity Release Council data suggests new customer levels began to pick up towards the end of the quarter, rising to 2,462 in June – a 23% increase from April.
“As with other residential property markets in the UK, the later life lending market is gradually becoming accustomed to the new normal and today’s figures suggest that customers are starting to look forward rather than backward. We know rates are higher, LTVs are lower and there are fewer product options available, but this does not change the fact that there is clear pent up customer need. 
“Whether they need to repay an outstanding mortgage, increase their retirement income or wish to provide a boost to family, many older people recognise the role that housing equity can plan. It is our responsibility to consider how we can innovate, educate and adapt to ensure that customers in this market receive the good outcomes they expect.”
Kay Westgarth, sales director, Standard Life Home Finance said: “While 2022 was a record year for the equity release market, the mini-budget and resulting economic uncertainty caused significant disruption that we are still seeing the impact of today.
“However, while April was the quietest month in 2023, things have started to pick up and the Equity Release Council figures suggest that June saw the highest level of activity year to date. This bodes well for the remainder of 2023 as the number of products on the market are starting to rise, and with pressures on LTVs easing, we will be able to support more customers.
“The recent Key Market Monitor suggested that we’ve also seen a slight uplift in people using equity release for discretionary spending, which suggests greater confidence about accessing housing equity – even if a potential correction is still being discussed.
“Although nothing is guaranteed and – as we’ve seen over the last few years – the residential property market in the UK can be impacted by forces beyond its control, the figures suggest that we can expect a more positive H2. Innovation is on the horizon and advisers are working hard to ensure that clients not only understand all their choices, but make the right decisions for their individual circumstances.”
- Views of contributors are not necessarily shared by the Council
