Equity release loans hit record £1.7bn: Equity Release Council

Owners took out 13,452 new equity release plans in the third quarter, with total loans topping a record £1.7bn, according to the Equity Release Council.

The body says this type of loan, among homeowners aged 55 or older, topped 13,000 for the first time, up 8% from the previous quarter.

He adds that the market also included 9,648 recurring customers and 2,419 other agreed advances, for a total of 25,519 active customers between July and September.

The number of new customers increased by 34% compared to a year ago, with loans to new customers and repeat customers increasing by 49% during the same period.

The size of new plans remained broadly stable at an average of £133,770 for lifetime lump sum mortgages, up 1% from the second quarter, while new withdrawal plans fell 3% to £88,340 for the initial withdrawal.

However, the body points out that credit activity fell by 10% in the last month of the period “as September saw difficult economic conditions and rising product prices”, marked by the mini-budget of the government.

Key Managing Director Will Hale said: “Today’s figures from the Equity Release Council highlight a growing and robust industry. However, as with other parts of the mortgage market, recent political uncertainty has impacted rates and product availability, meaning the last three months of the year are likely to be very different from the first three quarters. .

“While the appointment of the new Prime Minister appears set to stabilize markets, challenges remain and clients considering borrowing during or in retirement should seek specialist advice and consider all of their options.”

Craig Brown, managing director of Legal & General Home Finance, adds: “Demand for the release of equity has returned to pre-pandemic levels, as the nation looks to the value of its homes to meet the strategic needs of later life planning.

“While there may be a slowdown in house price growth, house prices are still at an all-time high and many homeowners have accumulated significant equity in their homes and view their homes as an asset for retirement.

“As we look to the next three months, we expect donations to remain a popular use of equity release. We may also see clients seeking to access real estate wealth to fund energy efficiency improvements. to make homes more durable over the long term.As always, this is not a silver bullet, but an important product to consider as part of a broader approach to retirement planning. »

Equity Release Council Chairman David Burrowes said: “The summer months have seen the equity release market return to its pre-pandemic growth trajectory, with additional protections added in the meantime. so that all new customers can make voluntary refunds when they can afford it and reduce their overall costs.

“Releasing shares is not an overnight purchase, and the desire to secure lower interest rates ahead of expected hikes likely influenced clients’ timing when entering into early transactions. of the year.”

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