The Equity Release Council has revealed that over-55 homeowners accessed £1.15bn of property wealth in the third quarter of this year.
This was down 2% from £1.17bn in Q2 2021 but up 19% year-on-year from £963m in Q3 2020 when pandemic restrictions were tighter.
The Council said its latest figures mean lending to new and existing customers has now exceeded £1bn for four successive quarters for the first time on record. This has been helped by a backlog of demand from successive lockdowns, the strong performance of the property market and further improvements in equity release product availability.
A total of 19,300 new and returning customers were served between July and September as the market moves back towards pre-pandemic volumes of business.
Drawdown lifetime mortgages remained the most popular product category, attracting 57% of new customers in Q3 2021 compared with 55% in Q2, while 47% chose a lump sum lifetime mortgage.
The average new lump sum lifetime mortgage reduced by 6% from Q2 to £121,464 as the Stamp Duty holiday threshold dropped from £500,000 to £250,000 after 30 June. The Council said that larger loans during Q2 were likely to be influenced by customers’ desire to gift money to support family members’ house purchases or use equity release to make their own purchase before the deadline arrived.
David Burrowes, chairman of the Equity Release Council, said: “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 look 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.”
Will Hale, CEO of equity release adviser Key, added: “The Equity Release Council’s figures highlight the growing confidence older homeowners have in using property wealth as part of financial planning with the market set for a record year.
“We’ve already seen a record four consecutive quarters with more than £1 billion lent to new and existing customers in each of these quarters which underlines the strong demand even in the face of the COVID-19 pandemic and economic uncertainty.
“The Stamp Duty Holiday has definitely been a factor as well as the strength of the housing market but underpinning it all is the commitment to innovation by lenders which is playing a crucial role by offering more flexible options to support advisers and their customers.
“With Q4 a traditionally strong period for this sector and a certain amount of pent-up demand due to pandemic restrictions, the market looks on track to finish strongly in 2021 – potentially edging over the £4.5 billion mark.
“Borrowing into later life is a simple fact of modern day society and this focus on providing customers with the products they want and need is helping to cement their role in later life financial planning.”