A two-speed equity release market emerged in the second quarter of 2019 as sales of new drawdown mortgages increased, while take-up of new lump sum mortgages mirrored the volumes seen in Q1 2018, figures published today found.

The latest quarterly market figures from the Equity Release Council (ERC) revealed 7,227 new drawdown lifetime mortgages were taken out in Q2 by older homeowners looking to release cash from their properties – up 2 per cent from Q1 2019 and 2 per cent from Q2 2018.

Furthermore, over two thirds (67 per cent) 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 – higher than any quarter prior to Q2 2018, despite being the lowest quarterly total seen over the last year.

The data highlighted the average size of new drawdown plans were consistent with those seen in the previous quarter in terms of customers’ first withdrawal (£63,166 against £62,416 in Q1). However, customers reserved more modest amount of housing wealth for future use (35,903 compared to £37,069 in Q1). The average size of a new lump sum plan taken out in Q2 was also 4 per cent lower, recorded at £93,712.

In addition to this, the total number of clients served increased by 2 per cent over the quarter to 20,866 and were up 3 per cent year-on-year. However, the number of new customers was down 1 per cent on Q1 to 10,731, although the number of returning drawdown customers increased 7 per cent to 9,154 over the same period, driven by more existing customers having already taken out these products.

Total lending between April and June fell slightly compared to Q2 2018 (- 3 per cent) to £911.3m with the year-on-year comparison decreasing by 6 per cent. 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.

In H1 2019, a total of £1.85bn was unlocked via housing wealth, compared with £1.84bn in H1 2018. Over 21,500 new plans were agreed in the period, slightly higher than the 21,490 recorded a year earlier, and a total of 41,2633 customers were served against H1 2018’s 38,912.

Commenting, ERC chairman David Burrowes said: “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.”

Key CEO Will Hale added: “The Equity Release Council’s Q2 figures underlines the continued strength of the market in the face of ongoing economic uncertainty. Although sales of new plans have slowed slightly, existing customers clearly remain confident in continuing to access their housing wealth to meet their needs and wants in later life.”

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