"Passing the £2bn mark for the first time indicates that housing wealth is becoming an increasingly important focus of retirement planning."
The Equity Release Council has confirmed that the total value of equity release lending surpassed £2bn for the first time in 2016.
Overall lending reached £2.15bn for the year, an increase of a third (34%) on 2015 with an additional £542m of lending activity: double the rate of growth from 2014 to 2015 (16% and £225m).
The sector also finished the year on a record quarterly high as lending increased 51% to £670m year-on-year across the last three months of 2016, from £445m in Q4 2015.
From October to December 2016, 8,303 new equity release plans were taken out: an increase of 12% from the previous quarter and up 30% year-on-year. The final quarter of 2016 also marked the first time since Q4 2006 that the number of new plans exceeded 8,000 in any single quarter. Overall new plans across 2016 stood at 27,563: the highest amount since 2008.
The number of new lump sum lifetime mortgage plans agreed increased by 26% year-on-year, outstripping the rate of growth in drawdown products, which rose 19% by volume over the same period.
Drawdown products remain the most popular with the number of new plans totalling 17,882, accounting for 65% of the market. However, the appeal of lump sum products saw them record their largest share by volume of new plans agreed (35%) since 2010.
Nigel Waterson, Chairman of the Equity Release Council, commented: “2016 has proven to be a historic year for the equity release sector. Passing the £2bn mark for the first time indicates that housing wealth is becoming an increasingly important focus of retirement planning. The market continues to become ever more competitive with growing choice and falling rates for customers a welcome consequence of moves by new and existing providers.
“It is vital that we now build on this momentum to ensure more people can access the necessary information and advice to make informed choices about how best to use their various assets in later life. With increased recognition of the role housing wealth can play, we look forward to working closely alongside government, regulators and industry to help support the UK’s ageing population.
“The sector’s commitment to high standards of advice and product provision has established a safe and reliable market for consumers, and with our membership also at record levels, The Council will continue to work with members to support best practice.”