The equity release market consolidated its recent growth with a total £3.92bn of housing equity withdrawn by older homeowners in 2019, in line with 2018’s year-end total of £3.94bn, new figures published by the Equity Release Council (ERC) revealed.

The ERC highlighted that the market had witnessed steady growth for the last 10 years – with the amount of equity accessed by older homeowners per year rising from £945.97m in 2009, to £3.92bn by 2019 – an almost four-fold increase over the course of a decade.

The latest figures, however, revealed the market had held its recent growth, with lending volumes remaining largely unchanged since 2018.

The figures revealed the final quarter of 2019 was the busiest period of the year – with more than £1bn unlocked in the fourth quarter alone. The ERC suggested it was one of the busiest quarters on record, second only to the fourth quarter in 2018, when lending volumes were just 0.1% higher.

“The sector enters 2020 in a strong position with updated standards and a greater number of diverse members signed up than ever before,” ERC chairman, David Burrowes, said. “Looking ahead, we’ll continue to work with stakeholders to ensure consumers are able to access the best advice while ensuring joined up financial planning, so that equity release remains a key consideration in mainstream retirement planning.

“Previously viewed as a niche product to support people’s retirement plans, the untapped potential of equity release is now being recognised. This comes as a growing number of customers are recognising the important role property wealth can play in meeting their retirement needs.

“This has been driven by competition, falling interest rates, increasing numbers of flexible and innovative product options and supported by rigorous standards in the market.”

The ERC’s latest figures revealed that the total number of customers served during 2019 reached a record high of 85,497, of which 44,870 took out new plans – compared to 46,297 in 2018.

The figures also showed an 11% increase for the number of returning drawdown customers, and a 15% rise to the number of further advances, which the ERC suggested meant that borrowers were unlocking conservative amounts, and only returning should they need to access further sums.

Commenting on the latest ERC release, Answers in Retirement Group chief executive, Stuart Wilson, said: “From our own perspective, last year saw us achieve a 25% growth in new business, with average loan sizes dropping slightly, which we believe reflects a focus on quality by advisers right across the sector.

“They are utilising new income-based products, with drawdown remaining the product of choice in the majority of cases. It was, however, noticeable that we saw a significant strengthening in activity during the fourth quarter, which we put down to a greater confidence in the political situation allowing later life borrowers to have confidence in their decisions.”

The ERC also suggested that increased product features and flexibilities, such as the ability to make voluntary or partial repayments with no early repayment charge, had helped to fuel growth – adding that the most popular product amongst older homeowners continued to be drawdown mortgages – with a majority 64% of new customers opting for a drawdown product over a lump sum product.

“The equity release market is well positioned for a return to growth after last year’s political and economic uncertainty,” added Key CEO, Will Hale.

“People retiring in 2020 own total property wealth of £142bn, with the average home among this group worth £388,900. Set alongside this the continued challenges with savings into pensions and there is a growing recognition of the need for lending solutions which can help boost income in retirement, while also addressing wider societal issues such as helping the younger generation onto the property ladder, and funding social care at home.

“Continuing innovation by equity release lenders means there are now more than 300 products available and the combination of historically low rates as well as flexible features such as the ability to service interest or repay capital demonstrates that the market is developing rapidly and is suited to help a wider range of customers.”

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