Every year the Equity Release Council publishes two market reports that explore the current landscape of the industry in depth and reveal total borrowing figures across the UK.
Their latest report, released in September 2019, highlights the rapid growth of the market and how it has transformed in recent years.
Here we provide the headline statistics from the full report which you can download from the Equity Release Council’s website.
At a Glance
There is no doubt that property is playing an increasingly important role for many people in later life. The number of people releasing equity from property remains high by historic standards and has increased by 6% year-on-year. The market continues to attract customers who are typically asset-rich with higher value homes. The average house price of new lump sum customers increased to £313,028 which is more than £80,000 greater than the average UK house price, according to the ONS UK House Price Index.
The number of product options available to borrowers has more than doubled in the last 12 months, from 126 to a record-breaking 287, providing more choice and flexibility than ever before.
There has been a significant increase in the number of products that enable borrowers to make regular interest payments, up by 80%.
Drawdown lifetime mortgages remained the most common type of new plan, with 65% of new customers choosing this option.
Interestingly, the average maximum LTV offered to consumers aged 55 to 85 decreased in the first half of this year.
Industry headlines have been awash with the news of record low interest rates. Average rates have gradually decreased as competition strengthens.
Three years ago, in the summer of 2016, the average interest rate was 5.96%, it then dipped slightly to 5.22% in July 2018. However, in August this year rates fell as low as 2.99% and in September they dropped even further to 2.82%.
The ageing population and the concentration of property wealth among older age groups are two key factors contributing toward the growth of the equity release industry. There are now more than 20 million people aged 55 and over in the UK and this figure continues to grow. What’s more, 64% of owner-occupiers who own their home outright are aged 65 and over – greater than any other age group.
With this in mind, it’s no surprise that the average ages for new drawdown and lump sum plans remain consistent at 70 and 68 years respectively.
There has been a rise in the percentage of single plans taken out in comparison to jointly held plans with women accounting for a greater share of market activity than men. For some, this has helped to ease the pension savings gap as women’s pensions are typically 1/3 of the size of their male counterparts.
For some consumers, equity release allows them to transfer property wealth to younger generations as a ‘living inheritance’.
Importantly, more than half of homeowners aged 45 years and over now see money invested in property as part of their later life ﬁnancial plans.
To view the full report please click here.