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Record £1.53bn property wealth unlocked in Q1

  • 26/04/2022
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Record £1.53bn property wealth unlocked in Q1
A record £1.53bn in property wealth was unlocked by equity release borrowers during the first quarter of the year, beating Q4 2021’s previous high of £1.43bn in lending.


This was a 34 per cent increase on the equity released from homes by borrowers aged 55 and over in the first quarter last year. 

According to the Equity Release Council’s (ERC’s) market statistics for Q1, the number of borrowers accessing equity release reached a quarterly high of 23,395. This is the first time customer numbers have exceeded 23,000 during any quarter. 

This was also a rise on the 19,975 customers serviced by the sector in Q4 2021 and the 16,527 borrowers recorded during the same quarter last year, when pandemic restrictions were still in place. 

Kay Westgarth, head of sales at Standard Life Home Finance, said: “This level of growth echoes the increasing demand we are seeing for equity release products as a greater number of over-55s recognise the benefits of later life lending as a way to boost their retirement income.” 


Borrower trends 

The number of new plans agreed amounted to 12,174 in Q1 2022, a 21 per cent increase year-on-year from 10,030 in Q1 2021.  

March was the busiest month for new plans with 4,560 completions recorded. This was the same month the ERC announced its fifth product standard, allowing new customers to make penalty-free partial repayments. 

Will Hale, CEO at Key Later Life Finance, said: “Product flexibility is vital to the sector’s continued development, and it is worth noting that customers saved almost £100m in future interest costs in 2021 by making penalty-free partial repayments.   

“With the introduction of this flexibility as the fifth ERC standard, customers now have more choice than ever before to find a product which fits with their changing circumstances through later life.” 

Drawdown lifetime mortgages were the most popular product type for new equity release borrowers, accounting for 54 per cent of plans while the remainder opted for a lump sum lifetime mortgage. 

The average size of the first drawdown instalment made by new borrowers increased by five per cent to £94,215 while the average lump sum rose by seven per cent to £131,781. 

Combined, the average loan accessed by new equity release customers increased by six per cent annually. This matched March’s inflation figure but falls behind the 11 per cent annual house price growth. 

Stuart Wilson, CEO at Air Group, said: “Until inflation starts to ease, we anticipate that we will see the number of borrowers using later life lending to reduce the pressure on everyday expenditure continue to build.” 


Existing customers 

Some 9,450 existing customers with drawdown lifetime mortgages withdrew funds from their agreed reserves. This was an increase on the 7,571 recorded in the previous quarter and the 5,566 seen in Q1 last year.  

However, it was below the pre-pandemic peak seen in Q1 2020, when 9,805 existing drawdown lifetime borrowers released funds. 

Stuart Wilson, corporate marketing director at More 2 Life, added: “With drawdown products currently making up almost three quarters of the plans sold annually, it is good to see these flexibilities in action and shows a robust path forward for the sector.  

“Looking to Q2, it’s likely that with inflationary pressures adding to existing demographic drivers, more over-55s will seek to augment their income and support loved ones by tapping into their equity while house prices remain high.” 

Some 1,771 further advances were agreed by existing borrowers. 

David Burrowes, chair of the Equity Release Council, said: “The popularity of equity release so far this year is the natural result of modern products offering greater flexibility and a property market where growth has far outstripped inflation, alongside an ageing population.” 

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