Record year predicted for equity release

After a year in which equity release figures topped £3.6 billion, experts are predicting a record year for deals in 2019.

Figures compiled by Key Retirement show the value of equity released last year was 19% up on 2017 with almost £10 million a day released in more than 47,000 deals at an average of £76,500 each.

Doubled in size

Chief executive Will Hale said: “The equity release market recorded another strong year of growth in new lending – taking it to £3.6 billion – and has doubled in size in three years. Once further advances and additional drawdown is included, it is getting close to £4 billion.

“The growth in gifting highlights the intergenerational benefits of equity release for families with money being used to clear debts, fund university fees and pay for house deposits and weddings.

Even the use of equity release to fund home and garden improvements has benefits for families as it helps people to ‘age-proof’ their home and preserve wealth for the family.”

Analysis

Analysis of the figures showed home and garden improvements were the most popular choices for the liberated cash with 64% of the total.

Holidays accounted for 33% and most of the rest was either gifted to other members of the family or used to pay debts.

South East England showed the largest amount realised with more than £1 billion coming from 11,777 transactions worth more than £1 billion while London alone came in second with £663 million being produced from 4,850 deals.

South West England came in third with £421 million from 5,546 deals.

Important role

David Burrowes, Equity Release Council chairman, commented: “Consistent growth in recent years has been driven by increased product flexibilities and innovation to meet a variety of consumer needs.

Intergenerational support remains a key usage, which highlights the important role that equity release now plays in the later life landscape on both an individual, family and societal level.

“Today’s market is built on a combination of increasing choice and robust consumer safeguards. Looking ahead, it is important that this is maintained as the range of later life products continues to grow.

It is vital we encourage customers to consider all available options in terms of their wealth and assets to get the best outcomes from a rounded approach to retirement planning.”

Another record year

A separate poll by Canada Life Home Finance has found the overwhelming majority of financial advisors expect 2019 to be yet another record year.

Two in five of those spoken to believe that the market worth £2 billion just three years ago will grow by that amount in the next 12 months, with the total topping £6 billion by the end of the year.

Thriving

Spokeswoman Alice Watson said: “The equity release sector is thriving. Recent figures show that almost as much was lent in the first three quarters of 2018 as the whole of 2017.

“This research into the views of UK advisers offers a real vote of confidence for the sector.

It’s clear they expect consumer demand to continue to grow apace, aided by advisers and providers increasing education, demystifying the products and making them more widely accessible.

“While uncertainty over the global political and economic situation may continue to hold back the housing market, equity release will still be a sensible solution for many – especially those using it as part of a more holistic approach to retirement planning.”