The recent Autumn 2018 Equity Release Market Report has found that there has been a staggering 81% increase in equity release from H1 in 2016 to H1 in 2018.
Among reasons including improved social care and helping family, improved product choice has also been considered an attributing factor to the upsurge in the use of equity release.
In 2017 The Equity Release Council found 58 products available to consumers, this has now rocketed to 139 products; highlighting the increased competition in the sector.
The report indicates that the greater competition has led to lower pricing. The current average interest rate for equity release products is 5.22%, this has reduced from 5.27% in 2017. Additionally, the report has shown that customers are paying 5% less across both drawdown and lump sum plans.
In total, 38,912 households with owners aged 55 and over used an equity release scheme from Equity Release Council members in H1 of 2018; this is an increase of 28% from a year earlier when the figure stood at 16,805.
Overall, customers continued to take less than a fifth (18.2%) of the property’s total value as an initial advance.
David Burrowes, Chairman of the Equity Release Council, commented: “These figures highlight the rise in new products and increased product flexibility, which is helping older homeowners to fulfil a host of pressing personal, social and financial needs. This innovation has brought more competition to the later life lending arena, while maintaining the standards and protections which ensure equity release products are future proofed to provide good outcomes for consumers.
“As customers navigate their way through a growing range of product choices – including retirement interest-only mortgages – the appropriate advice, guidance and support is needed to weigh up the various benefits, costs, flexibilities and protections to ensure they are suitable to meet both current and future needs.
“Industry and regulators must continue to work to ensure customers are aware of all the options available to them when deciding how best to support themselves and their families in later life, taking all their assets – including pensions, savings, investments and property – into consideration.”
The report indicates that the public are beginning to diversify or even change their attitudes in retirement savings. For every pound of savings that were withdrawn in the last twelve months, 50p of housing wealth was unlocked using equity release.
Whilst 1.1 million houses were purchased exclusively using deposit money from family or friends and the exponential increase of people aged over 65 living longer in general, the older generation need to think of ways they can free up the equity to fund their changing lifestyles and help loved ones. Equity release is fast becoming the leading option.
Have conveyancers noticed an increase in equity release to help fund new house sales? Is equity release preventing downsizing and reducing the housing stock? Will this be a problem in the future?
