It was a bumper first quarter for the equity release sector, with record annual growth in new customers and total lending.
According to the latest figures from the Equity Release Council, the value of equity release plans agreed in the first three months of the year rose 77% to £697 million. A total of 8,351 new equity release plans were agreed, up from 5,175 recorded in the first quarter of 2016.
In both cases, the year-on-year growth is the highest seen in any quarter since quarterly records began in 2002.
In the wake of reforms that have given consumers greater access to their pension savings and abolished the compulsory purchase of annuities, the figures suggest older homeowners are increasingly looking to their housing wealth as one of a range of assets to use as part of their retirement financial planning.
Drawdown lifetime mortgages remain the most popular choice of new plan among equity release customers. However, lump sum lifetime mortgages saw the highest rate of annual growth in terms of total value of lending, going up 110% to £321 million.
Nigel Waterson, chairman of the Equity Release Council, said: “The early months of 2017 have bucked the seasonal trend of a slower start to the year, with both new customer numbers and total lending reaching record levels. Alongside this, the annual rate of growth is also the fastest that the sector has seen, as equity release continues its progress to becoming a mainstream retirement product among older homeowners.
“Much of this activity is due to increasing supply as well as growing demand. The past year has continued the trend of new providers, products and flexibilities coming onto the market. Regulatory changes, such as the common-sense relaxation of affordability rules for interest-served products, have also provided more scope for the sector to meet burgeoning demand.
“Consumers continue to find equally varied uses for their housing wealth, including paying off existing debt such as interest-only mortgages, helping younger generations onto the housing ladder, investing in home improvements and improving their lifestyles in retirement.”
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