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  • Writer's pictureMortgage Tree

Equity release lending hits record quarter

Homeowners unlocked a record £1.08bn of property wealth in Q4, bringing the total across 2018 to £3.94bn, according to the latest Equity Release Council figures.

12,891 new equity release plans were agreed between October and December, contributing to an annual total of 46,397. Both these figures represent new highs and increases of 25% year-on-year.

The 46,397 new plans agreed in 2018 via Council members were more than double the 22,749 seen three years ago, fuelled by a wide range of new product features and flexibilities appearing on the market.

As of August 2018, 139 product options were available to consumers, more than double the number seen two years ago.

Products now give homeowners the option to receive regular monthly income, pay monthly interest, and make voluntary capital repayments free from early repayment charges.

Total lending activity for 2018 grew for a seventh consecutive year with a rise of 29% year-on-year.

Older homeowners collectively drew on £136 of housing wealth every second during Q4 2018, almost matching the current full new state pension weekly allowance of £164.

David Burrowes, chairman of the Equity Release Council, said: “The equity release market continues to experience sustained growth as it proves a vital tool for consumers looking to make the most of their financial resources in later life. Older homeowners are realising in growing numbers that property wealth can play a crucial role in supporting their retirement alongside pensions, savings and other assets.

“Industry, regulators and government must continue to explore how we can help generations of retirees, both today and in the future, to adopt a more rounded approach to later life planning.

“With a growing choice of products and features on offer, the market is maturing and adapting to offer a new level of flexibility to suit a range of financial needs and ambitions – from funding care costs to helping children to buy their first home. Equity release now plays a pivotal social role and the Equity Release Council will continue to ensure that products are underpinned by robust consumer safeguards.”

Steve Ellis, chief executive at Legal & General Home Finance, added: “Lifetime mortgages are clearly now a part of everyday later life planning, with more consumers using their housing wealth to make their ambitions for retirement a reality.

"The decline of final salary pension schemes, living longer in retirement and the growth in property wealth amongst the over-55s has certainly contributed to the rise of retirement lending, but over the last year we’ve seen big changes to this market. Lenders such as ourselves have stepped up to support interest-only customers and deliver new solutions. At Legal & General we launched our Optional Payment Lifetime Mortgage last year. We also recently launched an Income Lifetime Mortgage. This has opened up the market to more consumers giving them greater flexibility in how they unlock their housing equity.

"However, with our industry within reach of the £4bn milestone there is more we can do for retirement lending to reach its full potential. I have said that I believe the challenge over the next year will be matching demand with distribution. That means supporting more mortgage advisers to enter the market and talk to their clients about the possibilities that later life borrowing offers.”

Article by Rozi Jones for


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