£3.4bn unlocked through equity release in 2019

Retired homeowners released more than £3.4bn of property wealth in 2019, according to new data published by the over-55s specialist adviser, Key.

Key’s Equity Release Market Monitor revealed the total value of equity released dropped by 4% from £3.6bn, with the number of new plans being taken out last year slipping by 3%, from 47,081 to 45,598.

The last three months of the year, however, showed signs of a return to growth with £921m released, compared to £887m in the third quarter, as well as a rise in plan sales to 11,820 from 11,722, which Key suggested showed a rise in consumer confidence.

The new data also found that homeowners released almost £9.5m of property wealth per day in 2019 – although the over-55s specialist adviser indicated there was also caution among consumers, with the average amount being released each time sliding to £75,631, compared with £76,473 in 2018.

Key CEO, Will Hale, called 2019 a ‘busy year for the sector’ and suggested there are now more funders than ever before in the market, as well as more than 300 different plans on the market for consumers to choose from.

“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,” Hale added.

“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.”

Key’s data also showed 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 as they looked to increase their financial resilience in retirement.

The adviser added that the number 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.

Hale added: “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.”

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