Elderly homeowners free up £111,500 in property wealth: Key Later Life

Elderly homeowners freed up an average of £111,500 of home wealth in the first three months of the year, data from Key Later Life Finance shows.

Data showed plan sales jumped 21.4% in the first quarter of 2022 to 12,551 from a year ago, while the value of new capital released soared 30.5% to 1,399 billion, which is the highest ever for the industry.

The average amount released rose by 7.5% from the £103,710 subscribed last year and existing equity release clients also benefited.

Existing stock release customers were able to release an additional £37 million in advances or additional levies.

Low rates and increasing flexibility in equity release plans are driving remortgages up, with Key estimating 1,789 remortgage cases were completed in the first quarter, equating to a 78% increase from 1,005 in Last year.

Meanwhile, customers moved an average of £121,073 from an interest rate of 5% to 4.1% over the period. The surge in cases meant it accounted for 25% of all equity freed up for debt management, the data showed.

In the first quarter of 2022, customers could choose from 1,557 plans compared to 518 in the same period last year.

In the first quarter, 42% of customers using equity release to pay off their mortgage reached an all-time high and more than doubled from 10 years ago.

While the financial resilience built up by some during the pandemic has provided some people with a cushion, data from Key suggests there has been an uptick in those repaying unsecured debt by 27% (FY2021) 29% (Q1 2022).

The number of clients using home equity to help families fell from 21% last year when the stamp duty holiday was still in place to 15% this quarter, but they still accounted for 19% of all freed-up equity .

The number using the stock release to fund holidays rose to 11% from just 1% last year when Covid restrictions were still in place. However, the proportion of equity used to pay for vacations only increased by 1% to 2%.

Elsewhere, 45% of young capital release clients aged 55-64 have used the money to pay off mortgages, but their mortgage debt is less at £63,627 compared to £114,922 for those aged 65-74.

Customers aged 75 and over are paying off mortgages of £97,681 on average, the data shows.

On a regional basis, the total value of new capital released increased in all regions except London where plan sales were slightly lower. However, the total value of new equity released still increased by 17% in London.

The largest year-on-year increase in the total value of new equity released was in Northern Ireland, where the increase was 248.7%, followed by Yorkshire & The Humber at 66% and Scotland at almost 64%.

Northern Ireland also saw the largest year-on-year increase in plan sales at 151.1%, followed by Yorkshire and the Humber at 51% and Scotland at 46%. The East Midlands on almost 37% and the North East on 35% also saw significant increases.

The strength of the housing market in the South East and London means these areas accounted for 45% of all equity released in the three months, while accounting for 31% of plans sold.

More plans were sold in the South West, North West, East Midlands and West Midlands than in London, with Yorkshire and the Humber only slightly behind the capital.

Will Hale, Key Managing Director, said: “With headlines suggesting the UK faces a challenging inflationary environment, we are seeing more and more older clients choosing to manage their debt using the release of funds. clean. While it is obviously ideal to be able to repay any loan before retirement, modern capital release products now offer all new clients the option of making capital repayments without penalty. People over 55 have more options than ever before.

“It’s this type of innovation that serves to meet the growing needs of customers and has seen the first quarter of 2022 see a record number of plans subscribed. Nothing is certain, but after a hugely successful first quarter, the market in 2022 looks set to grow and serve more customers than ever before.

“As an industry, we must continue to rise to the challenge of supporting an ever more diverse universe of customers by building on the evolution that has seen tremendous growth in the number of products and features available as well as a greater choice in how clients access specialist advice.

Also commenting on the findings, Air Group Chief Executive Stuart Wilson said: “Today’s data shows how well the equity release sector has rebounded from the hits it took during the coronavirus pandemic. In the three months to the end of March 2022, more than 12,500 new plans contributed £1.4 billion in loans, making it the biggest first quarter on record.

“Interestingly, we have also seen a significant increase in the number of customers choosing to remortgage their plans to access additional borrowing as property prices rise or to obtain better rates and features. Although rates are increasing, they remain modest compared to historical levels, so customers looking for a better deal are likely to remain a feature of the market for the foreseeable future,” adds Wilson.

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