For a third successive year, the lifetime mortgage market saw the biggest annual increase in new loans compared to other areas of the mortgage market.

Across 2018, homeowners aged 55 and over took half as much money from their property wealth as they did from flexible pension funds, with 43,879 accessing money from the value of their homes in the second half of the year.

The total amount of lending in 2018 grew to £3.94bn – the seventh annual increase in a row – but the average amounts withdrawn remained stable, indicating that growth is down to broader uptake rather than increasing loan sizes, the ERC said.

The number of equity release products available has doubled in the past year and property value is increasingly used by retirees to meet their needs and those of their children who want to get on the property ladder. Today, lifetime mortgages are believed to account for around a third of all mortgages taken out by homeowners of 55 and over, up from a fifth a decade ago.

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Equity release has been a topic of discussion among brokers and a poll by Mortgage Solutions showed that many are prepared to undertake specialist training to cater to the growing demand.

Between 2017 and 2018, there was a 25 percent increase in lifetime lending, compared to 11 per cent for buy-to-let remortgages, 10 percent for standard remortgages and one per cent for first-time-buyers. Buy-to-let purchase saw the biggest fall, down 11 per cent.

 

Midlands sees strongest growth

The council’s analysis showed equity release rising across the UK, with double-digit growth across every region.

Over the last five years, London and southern regions – the East of England (158%), the South East (143%) and South West (99%) – experienced some of the strongest growth.

In the past couple of years, however, the Midlands and Northern Ireland have come to the fore, with the East Midlands (26%), West Midlands (20%) and Northern Ireland (21%) seeing some of the greatest increase in demand for lifetime mortgages between 2016/17 and 2017/18.

 

‘Asset rich but cash poor’

Industry figures were quick to respond to the council’s report.

Chris Knight, chief executive of Legal & General Retail Retirement, said: “As a generation of asset-rich but cash-poor retirees increasingly look to release their housing wealth whether to pay for home improvements or help their children onto the property ladder, demand for lifetime mortgages will continue to grow. The next challenge for this market is matching that demand with distribution.”

Dave Harris, chief executive at equity release lender More 2 Life, hailed product innovation as a key factor in the sector’s growth. He said: “Modern lending features such as downsizing protection, inheritance protection and flexible capital repayments offer borrowers greater flexibility and choice.

“If the industry is to continue growing at this rate, it will be essential to listen to advisers about what their clients want and need from later life products. However, it’s not only product innovation which will be important for industry growth.

“As demand for equity release rises, the sector must also invest in new technology to keep up and deliver the level of service that today’s retirees expect.”

Will Hale, chief executive at Key, said: “Older homeowners have considerable property wealth tied up in their houses which is enabling them to transform their own standard of living in retirement as well as to support other family members. Over a quarter use some or all of the money they release to help family and friends.”