"The equity release market goes from strength to strength as more homeowners use their property to help fund their retirement. "
The Q1 lending total surpasses the previous record quarter of Q4 2017, when £838m of housing wealth was unlocked.
The data reveals a similar trend in new customer numbers, which have almost doubled from 5,175 to 10,195 over the same period.
As a result of this increased activity, older homeowners unlocked nearly £10m of housing wealth every day from January to March 2018, up from £4.3m a day during Q1 2016.
Increased demand has been met by an increase in product numbers, which rose from 69 in January 2017 to 86 in January 2018.
Flexibility has also increased, with 70% of products now offering consumers the choice to make ad-hoc, penalty-free voluntary or partial repayments of their loan.
Drawdown lifetime mortgages continue to be the most popular product choice with two in three (68%) customers opting for this arrangement.
The number of existing drawdown customers returning to make withdrawals from their agreed reserves grew by 26% year-on-year in Q1 2018, from 6,019 a year ago to 7,588. Returning customers made an average withdrawal of £11,453 with returning drawdowns accounting for 10% (£89m) of lending activity overall.
In contrast, the £15.9m of lending in Q1 2018 via further advances was the lowest level seen since Q2 2016 (£15.2m).
David Burrowes, chairman of the Equity Release Council, commented: “It is clear that equity release has become an increasingly useful and flexible financial planning tool for older homeowners. While pensioners’ income is on the rise, a potential over-reliance on private pensions could lead to a retirement income shortfall in the future. New sources of income in later life are increasingly being sought, and this highlights the need for a rounded approach to retirement planning which considers all wealth, assets and product choices.
"Recent data showed the generational gap in homeownership is continuing to grow with 30-32-year-olds having a third of the property wealth that the same age group did ten years ago. Given that nearly 70% of all homeowner equity belongs to households aged 55 and over, it is inevitable that housing wealth will need to be used to help get the next generation onto the housing ladder. Equity release provides a valuable mechanism to provide this as a ‘living inheritance’.
“With demand continuing to grow, equity release is providing solutions to a wide array of customer needs. As well as working closely with policy makers to inform decisions on social care funding and the single financial guidance body, The Council continues to focus its efforts on upholding the highest standards of consumer protection that underpin confidence in the growing later life lending arena.”
Nici Audhlam-Gardiner, managing director of lifetime mortgages at OneFamily, added: “The equity release market goes from strength to strength as more homeowners use their property to help fund their retirement. As the Equity Release Council statistics show much of this growth is being driven by innovation and providers offering products that help broaden the appeal of lifetime mortgages to more over 55s.
“In particular the ability for homeowners to pay interest on a monthly or ad-hoc basis removes one of the biggest concerns about the cost of equity release. Currently over 50% of OneFamily mortgages are where the homeowner is actively managing the interest, and of this, around two thirds (70%) pay on a voluntary ad-hoc basis and around a third (30%) pay on a monthly basis. We also give customers the ability to swap to a more traditional product at any time, giving them total flexibility should their personal financial situation change.
“We will continue to innovate in the market and have further product launches planned for later this year, which we believe will attract more over 55s to the market.”
