The latest quarterly Equity Release report revealed a 2% increase in new plans agreed, bringing the total to 5,370 for the quarter. This marks the first time since the Autumn 2022 mini-Budget that the equity release market has seen two consecutive quarters of growth.
Between July and September, homeowners over the age of 55 withdrew £615 million in property wealth, representing a 6% increase from Q2. The average loan size also rose, with new lump sum lifetime mortgage customers borrowing £111,618 on average, while drawdown lifetime mortgage customers took £69,952 upfront and reserved an additional £49,747 for future use. Lorna Shah, Managing Director, Legal & General Retail Retirement, commented:
“The latest data points to a stronger later life market with growth over two successive quarters for the first time in two years. The motivation to draw on property wealth is driven by a variety of factors and is constantly evolving. Legal & General data over the last year revealed a decrease in the number of customers using their property wealth to cover living costs and emergency funds, with a growing trend of people using their property wealth to pay off mortgages or other forms of debt, for instance.
As a lender, we continue to work to meet the needs of a broad range of homeowners as equity release progressively becomes a more mainstream option to support later life financial planning.”
There was an 8% rise in existing customers taking further advances to extend their loans. According to the Equity Release Council, this suggests that many customers still have sufficient equity in their homes to support further borrowing. Equity Release Council chair David Burrowes said:
“Returning growth may have been modest to date, but it’s particularly encouraging to see the trend continue during the transition period sandwiched between the arrival of a new Government in early July and its first Budget statement later this month.
Behind these improving numbers are reports from both advisers and providers alike that consumer confidence is steadily returning. That may not translate into an uninterrupted upwards trajectory from here, but we know there are many households who have decided that releasing equity is right for them and are now focused on ensuring the timing is also right.”
Housing wealth continues to play a multi-purpose role in people’s financial plans, with mortgage refinancing, gifting and home improvements all common motivations for customers at the moment, alongside topping up retirement income.”
