2013 has seen the equity release industry bloom, with a total of
£473 million of housing wealth released by over-55 homeowners in
the first six months of the year.
This year's figure is nearly £50 million higher than the same
period last year and marks a 29% growth in the market from 2011,
findings from the Equity Release Council reveal. Recent months have
been particularly promising as the second quarter of 2013 reached
£239.2 million worth of equity release plans agreed, up by 2% from
the first quarter and 6% year on year. If the industry continues to
flourish, annual market value could top £1 billion for the first
time since before the financial crisis.
The increasing interest in equity release can be correlated to a
growing awareness of the pitfalls in pension income. Annuity rates
reached an all time low in January, while saving rates have
plummeted. The average rate on the top five easy access accounts
has fallen from 3.25% last summer to just over 1.6% today, while
rising living costs have also added to the strain.
Consumers turning to equity release have typically released
£54,000-£55,000 this year, with the average of both the first and
second quarters the highest since 2002. Drawdown products continue
to dominate the market but consumer interest in lump sum mortgages
has noticeably increased, chosen by 37% of consumers thus far in
2013 compared to 32% for the same period last year. This suggests
an increasing number of people are using equity release to cover
single high costs, perhaps helping out family members with
university fees, the cost of a wedding, a deposit for first time
buyer or paying off debts.
While equity release isn't yet a mainstream financial planning
tool for later life, the positive trajectory of its performance is
encouraging. To continue this trend it's vital we improve the
availability of equity release information, raising awareness of
equity release products and promoting the importance of equity
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