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Number of equity release customers reaches record in Q3 – ERC

  • 26/10/2022
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Number of equity release customers reaches record in Q3 – ERC
The equity release sector processed 13,452 new plans in Q3 marking a record number of new borrowers.


This was an eight per cent rise on the previous quarter and a 32 per cent jump compared to last year, figures from the Equity Release Council (ERC) showed. 

Along with 9,684 returning customers and 2,419 further advances agreed, the market saw 25,519 borrowers during the period and lent a record £1.71bn. 

Steve Wilkie, executive chairman of Responsible Life, said buoyant property prices gave homeowners a solution to their financial needs in retirement, and this is what drove record levels of activity. 

He added: “The rise in the number of new lifetime mortgage borrowers is perhaps most significant. While the total amount borrowed is affected by inflation and property price growth, the number of people whose best option in later life is equity release continues to rise. 

“This is unlikely to be temporary and it would be a mistake to link these increases solely to the cost-of-living crisis. Lifetime mortgages have been answering the call of other, much larger, crises for years, namely the pension gap, gender pension gap and the difficulties people face in saving enough money for retirement.” 

Compared to the same quarter last year, new customer numbers were up by 34 per cent and lending to all borrowers rose by 49 per cent. 

In addition to the £1.53bn lent in Q1 and £1.60bn in Q2, the equity release sector has generated business totalling £4.84bn so far this year. 

For the year to date, 72,824 equity release borrowers have been served, which is a 36 per cent rise on the same period last year. Total lending has increased by 40 per cent. 

Stephen Lowe, group communications director at Just Group, said: “We are optimistic that, despite the changing interest rate environment, this is a market with significant growth potential. There seems to be a broadening awareness of how the value people have built up in their homes can be used in later life. Today’s customer benefits from a wide range of providers competing for their business and a host of options to tailor the plan to fit their unique needs.” 


New borrower trends 

All three months of Q3 saw fairly stable lending, but August was the busiest month with 4,794 new loans agreed. This was compared to 4,515 in July and 4,319 in September and also makes August the busiest month of the year so far. 

New borrowers were relatively split between product choices with 52 per cent opting for lump sum lifetime mortgages and 48 per cent going for drawdowns. 

Average loan sizes for both lump sums and drawdowns were flat on Q2, with a one per cent rise for the former and a three per cent drop for the latter. 

The ERC said the average lump sum plan of 10 per cent mirrored the rise in inflation, which was 10.1 per cent in September. 

New drawdown borrowers held £48,485 in reserve on average, a 41 per cent surge on last year’s average. 

Craig Brown, CEO of Legal and General Home Finance, said: “As we look to the next three months, we expect that gifting will remain a popular use of equity release. We could also see customers looking to access property wealth to finance energy efficiency improvements to make homes more sustainable for the long term.  

“As ever though, it is not a quick fix, but an important product to be considered as part of a wider approach to retirement planning.” 


Returning borrowers 

The number of returning drawdown borrowers rose four per cent quarterly to 9,648, and compared to last year this was a 21 per cent increase. 

Returning borrowers accessed £14,444 in funds on average, which was seven per cent higher than the amount they used in Q2. This was up 17 per cent on the same period last year. 

Some 2,419 borrowers agreed a further advance on existing plans and 1,291 took out lump sums while 1,128 extended drawdown facilities. The ERC suggested borrowers were enabled to do this because of rising house prices keeping loan to values low. 

The average further advance lump sum stood at £32,401 in Q3, a three per cent uptick from Q2. Meanwhile, the average drawdown further advance amounted to £18,833 upfront and £8,158 held in reserve. 

David Burrowes, chair of the Equity Release Council, said: “The summer months have seen the equity release market resume its pre-pandemic growth trajectory, with extra protections having been added in the intervening years so all new customers can make voluntary repayments when they can afford to and reduce their overall costs. 

“Council standards mean there are measures in place to protect customers’ existing loans from rising interest rates, as well as ensuring that people can only take out equity release once they have considered it from every angle through detailed financial and legal advice.”   

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