Borrowers released £1.15bn of equity in the third quarter, up 19% on the same period last year and putting the market on track to reach a new record of £4bn of lending for 2021 as a whole, according figures published today.
The Equity Release Council (ERC) says lending was down by 2% from £1.17bn in the second quarter and notes that the large annual jump in lending was impacted by the fact that the UK was just emerging from the first wave of the pandemic in the third quarter of 2020.
A total of 19,300 new and returning customers used equity release between July and September, which is close to pre-pandemic levels.
Borrowers have released £3.46bn so far in 2021 – surpassing previous years and putting the market on track for over £4bn of activity this year, the ERC forecasts.
Fewer customers used drawdown facilities in Q3, but new plans and further advances both saw growth.
Average new lump sum plans reduced from £129,558 in Q2 to £121,464 in Q3 as the first stamp duty holiday deadline passed.
Equity Release Council chairman David Burrowes says:
“The equity release market has been a steady ship in turbulent times with activity broadly stable now for four successive quarters.
“The inevitable pandemic slowdown has been followed by the gradual return of confidence, helped by the robust performance of the wider property market.
“While annual activity has hovered close to £4bn since 2018, the market hasn’t stood still and the available product range has more than doubled since then.
“Homeowners in need of extra funds for later life are increasingly looking to equity release as a positive step, in the right circumstances, to benefit from a source of wealth they have built up over many decades.
“The stamp duty holiday inevitably impacted consumer behaviour over the summer and into autumn, with average loan sizes and drawdown activity fluctuating.
“Looking ahead, the ability to gift money to family members and share the proceeds of long-term house price growth is likely to remain an attractive option.
“Equity release can both help to close the financial gap between generations and allow people in later life to experience and enjoy the benefits of providing a living inheritance.”
Canada Life head of marketing for insurance Alice Watson says: “It’s great to see the industry-wide figures today which confirm the high levels of home finance activity we’ve experienced at Canada Life.
“Rising house prices and a proliferation of new, flexible products have led many families to consider equity release for the first time.”
More2life chief executive Dave Harris says: “Greater product choice and flexibility in the market have undoubtedly helped the market go from strength to strength and have allowed more homeowners to access the wealth tied up in their homes.
“While the value of average new lump sum plans naturally reduced between 2021 Q2 and Q3, in line with the winding down of the stamp duty holiday, using equity release to gift a deposit or to buy a ‘forever home’ remains a popular and attractive option.
“At more2life, we have seen a steady flow of purchase cases, despite the tax break coming to an end, and expect this to be one of the key lasting impacts of the initiative on the later life lending sector.”
