In its latest quarterly market figures, the trade body noted that 7,227 draw down lifetime mortgages were taken out in the second quarter of the year, accounting for more than two-thirds of new plans bought between April and June.
That’s the highest share seen since the end of 2017, with sales up five per cent from the previous quarter.
By comparison, 3,502 new lump sum lifetime mortgages were taken out, the lowest quarterly total seen over the past 12 months.
In line with last year
The data from the ERC confirmed that the average size of new draw down plans was only slightly up from the previous quarter, increasing to £63,166 from £62,416. The average size of a new lump sum plan was down four per cent from the last quarter at £93,712.
Total lending in the quarter dropped by three per cent to £911.3m, which was also down by six per cent on an annual basis.
However the trade body noted that with the first three months of the year being the busiest first quarter to date, overall activity in the first half of the half was broadly in line with last year. In total £1.85bn has been released this year, compared to £1.84bn in the first half of 2018, while the number of new plans has moved from 21,490 to 21,585.
Giving borrowers more choice
David Burrowes, chairman of the ERC, suggested that the current political uncertainty may have had a knock-on effect on recent activity levels.
He continued: “The emergence of draw down as the most common product choice shows how innovation has given customers more flexible options to build their plans around.”
Chris Knight, CEO of Legal & General Retail Retirement, agreed that the lifetime mortgages available now give borrowers more choice about precisely how they withdraw equity from their homes.
He continued: “Britain’s over-55s own nearly a trillion pounds of housing equity. As an industry, we need to do more to raise awareness about the benefits of lifetime mortgages, so that more people can unlock their housing wealth for a better, more colourful retirement.”
Advisers have a big role to play
Dave Harris, chief executive officer at more 2 life, noted that it was vital for lenders in this space to continue to innovate and add more product choice, but also suggested that intermediaries have a “huge role to play” in the expansion of equity release.
He explained: “We need more advisers to take CeMAP or at least keep abreast of the latest industry trends to ensure borrowers are aware of all the options available to them as they navigate the later life lending market.”