Record amounts of property wealth were accessed via equity release products in Q4 and across 2021 by more than 76,000 new and returning customers, according to the Equity Release Council.
The full data can be read here. We’ll add industry reaction to this page so do check back.
Stephen Lowe, group communications director at retirement specialist Just Group:
“Confidence rebounded last year as people who had delayed financial decisions during the early months of the pandemic chose to crack on with their plans. Rising house prices, historically low interest rates and a high level of competition between lenders is delivering a positive environment for people considering using some of the value tied up in their homes.
“In 2022 and beyond we expect to see advisers become increasingly focused on how people’s property assets can be combined with their other pensions and investments to meet their clients’ retirement aspirations. For example, there will likely be homeowners who have suffered a financial shock during the pandemic or are struggling with a cost of living squeeze and are looking for more creative solutions so they can still achieve their plans.
“Releasing funds by downsizing is often not practical or desirable and equity release offers a powerful way for a wide range of homeowners to use the wealth they have in their property to provide extra income, make financial gifts, undertake home improvements or adaptations, travel, or pay for care.
“Innovation in the sector is helping advisers better tailor plans to each client’s unique needs. Increasing choice combined with new developments such as medical underwriting which we are now pioneering across our range, give them the tools to deliver personalised plans at lower cost.”
Simon Gray, managing director at equity release advisory firm HUB Financial Solutions:
“Many people, and especially those whose plans have been knocked off course over the last couple of years or who fear a cost of living squeeze, may still have the same goals and be open-minded to ideas they may not have considered before. Rising home values and interest rates that remain close to historic lows, combined with increasing innovation in the sector, means equity release remains an attractive proposition.
“High quality advice remains the key. It is crucial to help people navigate the options and find the best plan to meet their individual circumstances and needs, whether their goal is bolstering their income, estate planning, providing cash lump sums, or paying for care.”
Will Hale, CEO of Key:
“Today’s figures highlight the vital role that equity release plays in the finances of many over-55s with almost 80,000 new and returning customers benefitting from accessing £4.8 n worth of housing equity.
“Key’s market monitor suggests that the increase in the amount released is due the prevalence of gifting, debt management and remortgaging of existing equity release plans.
“Over 5,200 customers chose to move an average of £135,529 worth of existing borrowing from an interest rate of 5.1% to 3.6% in 2021 – saving themselves interest and benefitting from the increased flexibilities of modern equity release products.
“While there is always more to do as an industry to support customers, we are pleased to see that housing equity is being used by increasing numbers of people to support their retirement aspirations.
“Looking ahead, with customers having focusing on meeting pressing needs over the last 24 months, 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.
“The later life lending market is able to support these wide ranging needs and this will be good for consumers, the market and the wider economy as we move through 2022.
“As an industry, we must rise to the challenge of supporting our clients by continuing the evolution that has seen significant growth in innovative products and options for customers.”
Kay Westgarth, head of sales at Standard Life Home Finance:
“While it is fantastic news that in twelve short months the industry has supported over 80,000 people who have released a record £4.8 billion worth of housing equity, we cannot rest on our laurels.
“With almost one in four people in the UK aged over 60, we need to see this as a challenge to better support more homeowners as they grapple with the issue of having a pension income that does not meet their retirement needs and aspirations.
“Boosted by the Stamp Duty Holiday, which only came to an end in September, gifting has certainly played a role in driving the market in 2022.
“However, these products also have a wider appeal and wealthier borrowers are actively using them to manage their finances.
“We look forward to playing an active role in this market as it continues to grow and prosper in 2022.”
Stuart Wilson, corporate marketing director, more2life:
“Today’s data from the ERC shows that the later life lending sector was very much at the forefront of rising mortgage demand last year, with a record £4.8bn released by older homeowners.
“2021 was a year of growth for the mortgage sector in many senses, with property transactions, house price inflation and the amount of property wealth unlocked through later life lending all rising beyond expectation.
“While rising pressure on older homeowners in the form of higher costs of living and greater job insecurity has certainly impacted over-55s desire to improve their finances by using housing equity, an emerging customer base is also turning to these loans to provide valuable financial options.
“Not only have we seen wealthier homeowners looking to include property wealth in their retirement planning but also an uptick in the number of people remortgaging existing plans to benefit from lower rates and product flexibilities.
“Against this complex backdrop, advice remains vital, and advisers must continue their work in educating borrowers on the range of options available and in assessing client vulnerability. It is evident that demand for later life lending products remains as varied as the innovations from lenders, with the number of customers using equity release and the number of products on the market both hitting new heights last year.”
Steve Wilkie, executive chairman of Responsible Life:
“The lifetime mortgage market has blown its all-time record out of the water.
“Total lending last year was up a massive 21.8% on the £3.94bn recorded in 2018. This is a product that is winning new audiences with each month that goes by. Not only are middle-class homeowners now turning to it as a retirement solution in a big way, but even IFAs and wealth advisers are increasingly factoring it into their advice.
“The bottom line for millions of people is that putting housing wealth to good use produces a retirement that is richer with opportunity both for them and their loved ones. Gone are the days when homeowners are content being property rich and cash poor. This ERC report demonstrates how retirees are seizing control of this aspect of their financial lives.
“With the fourth quarter of 2021 setting a lending record of its own, the stage is set for lifetime mortgages to continue to challenge the old order of later life financial planning this year.”
