"The equity release market's meteoric growth over recent years has obviously slowed dramatically but this is to be expected given current economic uncertainty"
Its latest research reveals that 7,227 new drawdown lifetime mortgages were taken out in Q2 - up 5% from Q1 2019 and 2% from Q2 2018. More than two thirds (67%) of new plans taken out between April and June were drawdown, the highest share seen since Q4 2017.
In comparison, 3,502 new lump sum lifetime mortgages were taken out, the lowest quarterly total seen over the last year.
Total lending between April and June fell slightly compared to Q2 2018 (-3%) to £911.3m with the year-on-year comparison decreasing by 6%. Following the busiest Q1 of any year to date, this meant overall market activity in the first half of 2019 was broadly in line with H1 2018.
Clients served rose by 2% over the quarter to 20,866 and were up 3% year-on-year. Although the number of new customers was down 1% on Q1 to 10,731, the number of returning drawdown customers increased 7% to 9,154 over the same period, driven by more existing customers having these products.
Over H1, a total of £1.85bn of housing wealth was unlocked versus £1.84bn a year earlier, with 21,585 new plans agreed compared to 21,490 in H1 2018.
David Burrowes, chairman of the Equity Release Council, commented: “The number of people drawing on housing wealth in later life remains high by historic standards and remains an important mainstream funding option for many, despite short-term activity inevitably showing signs of the uncertainty that has impacted other areas of the economy in the current political climate.
“The long-term trend of an ageing population with more individual responsibility for funding retirement and lifestyle needs in later life is unchanged. The emergence of drawdown as the most common product choice shows how innovation has given customers more flexible options to build their plans around.
“Older homeowners are recognising the benefits of including their property wealth as part of their later life financial plans. Indeed, our research shows that more than 50% of people aged 45+ already do so. This data highlights the considered approach that customers take when accessing their property wealth; we will continue to see bricks and mortar play an important role alongside pensions, savings and other assets”
Mark Gregory, founder and CEO of Equity Release Supermarket, added: “The equity release market's meteoric growth over recent years has obviously slowed dramatically but this is to be expected given current economic uncertainty which has a domino effect, impacting consumer confidence. The Bank of England recently reduced its forecast for Q2 ecomonic growth from 0.2% to zero and June 2019’s Consumer Confidence Index fell again. Consumers expectations for the UK economy are now 8 points lower than they were in June 2018.
"When consumers lack confidence, they tend to put off making big financial decisions – and taking out equity release is obviously a decision that must be carefully considered. We’ve seen the same trend before which has impacted the market in the short term. I believe we are simply seeing this again as all the long term growth indicators for the equity release market are still in place – such as the shortfall in pension provision, the need to repay debt in retirement or older people’s desire to support their children financially."
