"We did not see the continued double digit growth that we have seen in recent years as consumers – unsettled by current economic and political events - chose to defer decisions"
The total value released dropped by 4% from £3.6 billion, while the number of new plans taken out slipped by 3% from 47,081 to 45,598 last year.
Despite this, Q4 saw signs of a return to growth with £921 million released compared with £887 million in the third quarter and a rise in plan sales to 11,820 from 11,722.
In 2019 drawdown accounted for 73% of new business, up from 64% in 2018. There has been a rise in the number of products on the market, with lenders launching more products with lower rates and more flexiblity.
Enhanced drawdown, which offers improved terms to customers with health or lifestyle issues, accounted for 20% of sales.
Around 29% of equity release customers in 2019 used some or all of the cash to pay off loans or credit cards while 20% used money to clear existing mortgages.
The numbers of customers switching from existing equity release plans to take advantage of historically low interest rates also rose to 5% in 2019 compared with 4% in the previous year.
Will Hale, CEO at Key, said: “2019 has been a busy year for the sector, there are now more funders than ever before in the market and more than 300 different plans as well as growing consumer interest. That said, we did not see the continued double digit growth that we have seen in recent years as consumers – unsettled by current economic and political events - chose to defer decisions around how housing equity might help them in later life.
“Although we saw small year-on-year falls in the value and volume of equity release taken out, the last two quarters were more upbeat and we start the year with a positive headwind fuelling the belief that we will continue to see growth in the equity release market. There are more than 24 million over-55s in the UK so market drivers remain strong and as consumer confidence grows we will increasingly see more people looking to take advantage of the innovative new products and continued low rates.
“Indeed, 2020 has the makings of a very interesting year for the equity release market but we need to continue to focus on educating and engaging with key audiences to clearly highlight how housing equity can play a role in meeting the challenges that individuals and the country as a whole face. Boosting retirement income, helping people to pay for social care at home and helping the younger generation onto the property ladder are all positive outcomes delivered by taking a holistic approach to managing your assets in retirement.”
