Annual equity release lending surged ahead in the first six months of the year to its highest level for over a decade, new figures from the Equity Release Council show.
According to its 2016 Equity Release Market Report, equity release lending rose by £198 million in the first half of 2016 compared to the same period the previous year.
Nigel Waterson, chairman of the Equity Release Council, said: “Growth is being driven by a combination of rising consumer demand and continuing signs of innovation and change in the market.
“In terms of demand, savings shortfalls and other financial challenges leave many over-55s looking for an extra source of income in later life, while housing wealth also offers a vehicle for intergenerational transfer of wealth and inheritance planning.”
Equity release gives you access to the wealth tied up in your property without having to sell or move home. It is designed for older homeowners who own their property outright or have relatively small mortgages to pay.
You can borrow against the value of your home, sell it or part-exchange it for a lump sum or a regular monthly income.
The rise has come at a time when more providers and products have appeared on the market.
Research by Moneyfacts in March showed the range of equity release products has grown by 34% in the past year and more than doubled compared with three years ago.
Drawdown lifetime mortgages remain the most popular equity release product, accounting for 67% of new plans taken out.
A total of 7,917 drawdown plans were agreed – the largest number in any first-half period on record.
The average age of equity release customers was just below 70 (69.9), with the age bracket from 65 to 74 remaining the most common for taking out a new plan.
The percentage of new customers aged 55 to 64 has risen from 17.5% to 21.2% – a sign that people are starting to look at housing wealth as a potential asset earlier in the retirement planning process.
The average value of equity release customers’ homes has risen roughly in line with UK house prices over the last year by 8.1% to £306,854.
Dean Mirfin, technical director at Key Retirement.com, said: “The 10-year high for equity release market growth highlights how the combination of record low rates for plans and house price growth is making the case for how property wealth is increasingly supporting retirement planning.
“Retired homeowners have more than £1 trillion property wealth owned outright with the over-65s seeing strong growth from their investment in their house so it makes perfect sense to capitalise on those tax-free to enhance their retirement standard of living.”
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