The popularity of equity release shows no sign of diminishing

The popularity of equity release among older homeowners in the UK shows no sign of diminishing.

Trade body the Equity Release Council says in its latest market report that total annual lending activity grew for a seventh consecutive year to reach £3.94billion in 2018.

Homeowners over 55 accessed 50p of housing wealth for every £1 of savings withdrawn through flexible pension payments last year - highlighting the increasing role of property wealth as a supplementary source of later-life funds.

As product options continue to expand, the lifetime mortgage market saw the biggest annual increase in new loans compared to other mortgage market segments for a third successive year.

Growth continues across all UK regions

Buoyed by continued growth across all UK regions, lifetime mortgages are now estimated to account for around a third of all mortgages taken out by homeowners from their mid-50s onwards, compared to less than a fifth 10 years ago.

In the second half of last year, 43,879 over-55 homeowners accessed money from the value of their homes including 24,907 new plans agreed.

At the start of 2019, the range of product options that met Equity Release Council standards - backed by product safeguards and independent legal advice alongside regulated financial advice - had doubled to 221 in the space of a year.

The report also highlights measures put in place by lenders to keep consumers' withdrawals of housing wealth in proportion to their age and potential longevity - offering an average maximum loan to value of 18.5% for those aged 55 compared to 31.5% aged 70 and 47.1% at 90.

Comment

David Burrowes, chairman of the Equity Release Council, said: "Last year saw equity release enter the mainstream of financial services as an increasingly-popular way to meet important and diverse social needs in later life.

"Flexible options to access housing wealth are helping the nation's growing population of older homeowners to fund lifestyle purchases, satisfy daily needs, support long-term financial planning or assist their families.

"As the demand for equity release grows, so does the need for quality advice. It is vital that consumers have access to professional support that considers short and long-term needs, the broader retirement picture and the role of family in decision-making.

"Equity release is not a 'silver bullet' for every retirement need, but a growing number of homeowners are finding it can be a solution to meet a range of financial goals."

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