UK home owners release record amount of equity from their properties

Equity release lending in the UK reached a new high of £1.61 billion in the final quarter of 2015 as home owners over the age of 55 unlocked a record amount of housing wealth.

Lending via drawdown products totalled £271 million between October and December 2015, the largest quarterly total since this type of lifetime mortgage first emerged in 2004, according to data from the Equity Release Council.

At 22 per cent, the year on year lending growth rate in the final quarter of 2015 was the largest of any quarter last year, despite a slight dip in quarterly lending from £453 million in the third quarter to £445 million.

Since falling to a post-recession low of £789 million in 2011, annual equity release lending has more than doubled in the last four years and now exceeds its pre-recession peak of £1.21 billion. Over the whole of 2015, drawdown lifetime mortgages accounted for 66 per cent of new plans agreed, while lump sum lifetime mortgages made up 34 per cent.

Around 70 per cent of new plans agreed in the fourth quarter of 2015 were drawdown; up from 63 per cent in the previous quarter as more people opted to withdraw their housing wealth in stages to boost their retirement income.

Drawdown lending for the whole of 2015 was also the highest on record at £961 million. It pushed total equity release lending activity by members of the Equity Release Council to £1.61 billion; up 16 per cent from £1.38 billion in 2014.

“These year-end figures are the latest sign of growing reliance on housing wealth as a key pillar of later life financial planning,” said Nigel Waterson, Chairman of the Equity Release Council. “The rising popularity of drawdown has been one of the success stories of the last decade and product features have since appeared allowing customers to protect a percentage of their equity as an inheritance, make part-repayments of capital or make interest repayments on their loan.”

Link: Equity Release Council