This rose from a total of £1.05bn last year, as the average borrower released £114,354 from their property during this quarter.
Borrowers in London unlocked the most wealth at an average of £261,946 per household. Equity released by homeowners in the South East, South West and West Midlands exceeded £100,000 respectively.
The number of plans taken out rose by 29 per cent to 13,341.
The sale of plans and the total value of equity release rose across every region, with London and Scotland being the only places to record single digit growth of four per cent and two per cent respectively. Scotland saw a 34 per cent increase in the value of equity released to £54m while London reported a 65 per cent rise to £292m.
Existing equity release borrowers
Equity release borrowers took advantage of product flexibility with remortgage activity rising by 17 per cent compared to 14 per cent last year.
Key estimates that there were 1,004 remortgage cases last year which doubled to 2,268 this year due to lower interest rates. During Q3, the average customer moved a balance of £115,817 from an interest rate of 5.1 per cent to 4.6 per cent.
By the end of the period, there were 582 products on the market with all new options offering penalty-free ad hoc capital repayments. Some 65 per cent offered downsizing protection, while 63 per cent allowed borrowers to service interest. Some 64 per cent of products offer fixed early repayment charges (ERCs), while 34 per cent gave an option of either fixed or variable ERCs.
Just two per cent of plans offer gilt-linked variable ERCs.
Most borrowers were driven to equity release to manage their finances with two-thirds of borrowers using the funds to manage debt. Some 28 per cent put the money towards clearing their mortgage, a quarter rebroke their equity release plan while seven per cent repaid unsecured debt.
A fifth of borrowers used the money to support their families, gifting an average of £53,503.
‘Older borrowers sitting on unmortgaged wealth’
Will Hale, CEO at Key, said: “With over-65 homeowners sitting on an estimated £3trn of unmortgaged property wealth and four in five of the customers who progress to speaking to one of our advisers looking to address a financial need, there is a clearly a key role for the sector to play in helping older customers navigate through the current economic challenges and still live a fulfilling later life.
“Modern lifetime mortgages have come a long way in a short period of time, so when you consider features such as drawdown, the ability to serve interest and/or the opportunity to make ad hoc capital repayments free of ERCs, there is more opportunity than ever before for customers to carefully manage their borrowing.”
He added: “The proliferation of fixed early repayment charges which typically disappear after around ten years – although it can be as low as five years – also means that remortgaging these plans in future is a real option for many people.
“In these market conditions, more than ever before, specialist advice is crucial.”
