It is continuing to experience record numbers of new customers with 8,351 new plans agreed in the first quarter of 2017, a rise of 61%, while the total value of lending reached £697 million, a rise of 77%.
The figures from the Equity Release Council also shows that for the first time since 2003 the market has started a new year busier than it ended the previous one.
Drawdown remains the most popular product type, but the first three months of the year also saw significant growth in lump sum activity which accounted for 40% of new plans agreed and over 6,000 customers with drawdown lifetime mortgages took advantage of reserve facilities.
The market has shown sustained momentum following a record breaking 2016 in which annual lending reached £2.15 billion. The figures are the latest sign of burgeoning supply and demand for products allowing older home owners to unlock their housing wealth in later life in order to boost their retirement finances.
Between the fourth quarter of 2015 and the first quarter of 2016, the number of new equity release plans agreed fell 19% while the total value of lending fell 11%. In contrast, the number of new plans increased 1% from the fourth quarter of 2016 to the first quarter of 2017 while the total value of lending by increased 4% from £670 million.
Comparing the figures over the two years to the first quarter of 2015, the last quarter before the pension freedoms were introduced, the number of new plans agreed in the first quarter of 2017 was 71% higher while the total amount of lending in the first three months of 2017 has more than doubled from £326 million, an increase of 113%.
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 home owners are increasingly looking to their housing wealth as one of a range of assets to use as part of their retirement financial planning.
‘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 home owners,’ said Nigel Waterson, chairman of the Equity Release Council.
‘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,’ he explained.
‘Equity release can offer a valuable solution to help meet the many and varied financial demands people face in later life, backed by a host of product safeguards along with financial and legal advice. 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,’ he added.
The sector is likely to see further growth in the second quarter of the year according to Alice Watson, head of marketing at Retirement Advantage Equity Release. ‘This is unprecedented growth for the equity release market. These figures reinforce the trend that take-up of equity release is growing at levels unparalleled by other forms of mortgage finance. There appears to be no let up in the number of people recognising the value in considering equity release as part of a more holistic approach to retirement income,’ she said.
‘With continued innovation among lenders looking to expand product ranges providing a more compelling choice for consumers, it’s no surprise that the equity release sector is proving attractive to more people. Retirement Advantage recently introduced two new products to its range, further enhancing our ability to meet the increasingly diverse needs of customers,’ she added.
http://www.propertywire.com/news/uk/equity-release-market-uk-continues-see-strong-growth/
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