A total of £4.4bn – or £12m per day – was borrowed through an equity release product in 2021, a new market report from Key details.
The data shows that the number of plans arranged during the year rose by 4% to 41,991, while the total value released increased by 28%.
The average amount taken out increased rapidly too, by 23% on the year, to £104,792.
And rebroking increased by 174% on the year.
Key says that remortgaging became “more important” in 2021. Last year saw 5,295 remortgage cases compared to 1,930 in 2020. The average balance moved in 2021 equalled £135,529, going from an interest rate of 5.1% to 3.6%.
Drawdown plans, meanwhile, made up 74% of sales in 2021 compared to 70% in 2020.
The report also shows the number of borrowers using equity release to pay off mortgages almost doubling from 20% in 2020 to 38% in 2021.
“The growth the amount used to repay mortgages was driven in part by the significant uplift in the number of people remortgaging equity release plans to access new features, improve interest rates and increase borrowing,” explains the report.
Other changes in behaviour included the number of people using money to pay off unsecured debt tumbling from 18% to 6% and the number of people spending on holidays also falling rapidly – from 23% to 7%.
Key chief executive Will Hale comments: “We’ve seen a subtle shift away from discretionary spending with more customers focusing on using their housing equity to improve their financial resilience by repaying or remortgaging borrowing while others have concentrated on supporting family.
“The growing desire to move existing equity release borrowing to a better rate has been a feature of 2021 and we see this becoming an increasingly normal part of the market.
we anticipate that there will be pent up demand for discretionary spending amongst some over-55s who have found that their retirement is currently very different from what they anticipated.
“However, this is likely to be tempered by inflationary pressures and increasing numbers of customers seeking to boost their or their families spending power to meet rising household bills.”
Air Group chief executive Stuart Wilson says: “One of the key takeaways to come out of this is the sector’s growing maturity when it comes to refinancing and rebroking.
“We are a long way past the point where initial equity release borrowing is ‘for life’ and it’s clear that both advisers and their clients have been benefiting from the sector’s competitiveness, particularly in terms of lower rates but also in terms of the flexibility now offered by many lenders.
“A 174% increase in rebroking is clearly significant and provides advisers with something akin to a new front for activity, in terms of supporting existing clients and ensuring they are on the right product at regular intervals.
“The other point to make is around the increase in average loan size – up 23% to close to £105k – and the use of that money, predominantly in order to pay off debt and to support family members.
“In a sense we’re seeing uses for equity release at both ends of the mortgage ‘life span’ with customers increasingly using the products to pay off mortgages, while at the same time helping family with deposits in order to help them on the ladder.”
