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26 Apr 2017

Record growth for equity release in first quarter

Growing numbers of people are taking advantage of equity release to boost their retirement finances, a new report reveals.

Equity release allows older homeowners to unlock the wealth tied up in their property without having to sell it and move to another home. Depending on the plan chosen, homeowners can can either borrow against the value of their home or sell all or part of it in exchange for a lump sum or a regular monthly income.

The first quarter of 2017 saw record annual growth in new customers and total lending, industry body the Equity Release Council said on Monday.

A total of 8,351 new equity release plans were agreed, a 61% increase compared to the 5,175 recorded in the first quarter of 2016. The total value of lending reached £697m, up 77% from £394m a year ago.

Both quarterly measures now stand at record highs, with sustained momentum following a record-breaking 2016 in which annual lending reached £2.15bn.

The most popular choice of new plan among equity release customers remains drawdown lifetime mortgages. However, lump sum lifetime mortgages showed the highest rate of annual growth in both new customer numbers and the total value of lending during the first quarter.

Nigel Waterson, chairman of the Equity Release Council, noted that the first three months of 2017 had bucked the seasonal trend of a slower start to the year.

He explained: “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.

“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.”

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