The Equity Release Council has revealed that mortgage repayments rose by 20% to reach a record £38bn in the first six months of 2021.
This is equivalent to £200m a day or £3,500 for every mortgaged household.
The trend has been fuelled by regular repayments and overpayments reaching record hights, new borrowing ahead of the Stamp Duty deadline and fewer mortgage payment holidays.
The Council said that the UK is now carrying over £1.5trn of mortgage debt for the first time on record, but factors including house price rises mean for every £1 of mortgage debt, there is more than £3 of equity in our homes.
The overall value of UK housing stock has risen from £5.67trn to £6.42trn over the last year, with private property wealth reaching a new high of £4.87trn.
Lifetime mortgage product options have doubled in the last two years which, combined with low rates and flexible features, increases the appeal of using equity release to help meet later life financial needs, the Council said.
The total number of equity release products available increased to a record high of 668 in July 2021, from 448 six months earlier. Customers have access to more than double the number of product options than two years ago.
Consumers have access to double (127%) the number of product options than two years ago. 68% of products allow customers to make voluntary capital repayments with no early repayment charge, 89% of products offer fixed early repayment charges.
The average equity release rate crept up modestly to 4.26% but there are still more options available today with rates of 4% or lower than a year ago, the Council added.
David Burrowes, chairman of the Equity Release Council, said: “UK households are converting unprecedented amounts of mortgage borrowing into property wealth as we look to move on from the worst of the pandemic. Combined with property price rises fuelled by the Stamp Duty holiday, homeowners have record equity to potentially draw upon in later life.
“The transformation of later life mortgages in recent years has given people more opportunities to access their biggest source of wealth. We are seeing mindsets change to the point that tapping into property wealth is now a common consideration to meet various retirement needs, from topping up pension income to providing a ‘living inheritance’ via gifting to younger generations.
“The modern equity release market has shown resilience in the face of uncertainty to climb back towards pre-pandemic levels. The disruption of the last 18 months has not slowed the pace of innovation in lifetime lending, and it is important the market continues to evolve to address the financial challenges people will face in the post-pandemic world.”
Stephen Lowe, group communications director at retirement specialist Just Group, added: “This is another upbeat report showing stability returning after the turmoil of the pandemic and it bodes well for growth as people who postponed major financial decisions get their plans back on track, whether they are looking to release lump sums, gift money, generate extra income or pay for care.
“Historically low interest rates and high levels of competition between providers is driving innovation.
“For advisers, this increased choice, coupled with new developments such as medical underwriting which we are now incorporating across our Just for You lifetime mortgage range, means they can tailor plans to the individual client’s needs, delivering a personalised plan. We estimate 6-in-ten clients will get a better deal after their adviser has used medical underwriting.”