Equity release lending passed the £800 million mark for the first time in a single quarter, driven by greater competition in the market, new figures show.
According to the Equity Release Council, the over-55s withdrew a total of £824 million of property wealth from their homes via equity release plans during the third quarter – up 44% from last year.
It was the highest total lending figure seen in any single quarter since records began in 2002, surpassing the previous record high of £701 million.
There were a total of 17,982 customers between July and September, of which 9,905 of were new customers.
The remainder were made up of 6,849 returning drawdown customers releasing housing wealth in instalments and 1,138 further advance customers agreeing extensions to existing plans.
The proportion of new customers choosing drawdown over lump sum lifetime mortgages or home reversion plans in rose by nine percentage points to 77% from the previous quarter and 15 percentage points year-on-year.
Drawdown products typically see customers releasing smaller amounts of equity to begin with, therefore reducing the build-up of interest over the duration of the plan. It also provides customers with the flexibility to unlock further sums via future instalments as and when they need to.
Nigel Waterson, chairman of the Equity Release Council, said: “The sustained growth in housing wealth withdrawals is indicative of a wider shift in the way consumers are approaching their retirement planning, by taking a broader range of financial options into consideration.
“Property is, for many people, their largest asset and has the potential to play an increasingly important role in the future of retirement funding. The combination of rigorous safeguards and flexible products in today’s market is one reason why housing wealth is now being used to support a wide range of financial goals.
“These range from boosting pension income and supporting retirement lifestyles to funding home improvements and adaptations, consolidating debts and providing a living inheritance to younger generations.”
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