New figures released by the Equity Release Council reveal that a record amount of equity was released from homeowners’ properties in the second quarter of 2018 – totalling £971 million. The total amount of equity release lending in the quarter increased by 12% on the first quarter of the year, and represented a 39% year-on-year increase from the second quarter of 2017.
The total number of customers who released equity in the quarter was 20,326 – an increase of 9% from the year’s first quarter, and a 27% increase year-on-year from the same period in 2017. Overall, 11,295 customers took out new equity release plans during the quarter, as more and more over-55s use this type of financial product to free up the cash value of their homes or refinance existing mortgages.
In terms of the types of equity release plans being taken, around two in five (38%) opted to draw a single lump sum payout against their home equity, while three in five (62%) instead opted for drawdown lifetime mortgages, which allow borrowers to draw funds in instalments over time rather than all at once. Lifetime mortgages continue to form the vast majority of plans taken, with the other main form of equity release – home reversion plans – accounting for fewer than 1% of all new plans taken out in the second quarter.
David Burrowes, chairman of the Equity Release Council, said: “The social utility of housing wealth is increasingly recognised at a consumer, industry and policy level. Property wealth has an important role to play as part of the solution to many pressing socio-economic issues, from boosting retirement incomes to funding social care and easing intergenerational pressures by helping people to pass on a ‘living inheritance’.
“Consumers are releasing money from their homes for a variety of reasons, and features like downsizing protection and repayment options mean today’s equity release product range is designed to evolve as people age and circumstances change. Growing choice and flexibility has propelled equity release into the mainstream consciousness, and it is crucial that consumers are encouraged to weigh up all the choices available to them.”
Equity release can be a positive way for older homeowners to access the wealth tied up in their property, but the variety of different products and options on the market has the potential to be confusing. Here at Premier Equity Release, we have the experience and expertise to help you understand the options available and choose the plan that’s best for you. Give us a call today or contact us online to discuss how we can help you.