Record £4.4bn in equity released from property in 2021

Older homeowners released a record £4.4bn in property wealth last year, new data from Key has revealed.

The figure equates to a rate of more than £12m a day as customers helped family and secured their own finances by repaying debt or remortgaging existing borrowing.

Key’s research showed that around one in five equity release plans (19%) taken out in 2021 were used to support family, while two in five (38%) were used to repay residential mortgages or remortgage existing equity release borrowing.

The equity release adviser’s findings also indicated that the number of plans taken out increased by around 4% in 2021 – to 41,991 from 40,470 in 2020 – and was still lower than the record reached in 2018 (47,081) and the 28% growth in the value of the market was driven by customers releasing larger amounts.

Key CEO, Will Hale, said that the figures suggest the equity release market is starting to “live up to its potential”.

“We’ve seen a subtle shift away from discretionary spending with more customers focusing on using their housing equity to improve their financial resilience by repaying or remortgaging borrowing while others have concentrated on supporting family,” Hale commented.

“The growing desire to move existing equity release borrowing to a better rate has been a feature of 2021 and we see this becoming an increasingly normal part of the market.”

The figures also revealed that over-55s released an average £104,792 worth of housing equity via equity release during 2021 – an increase of 23% on the previous year and 37% higher than 2019 before the pandemic started.

Remortgaging also appeared to become more important in 2021 with Key’s data showing that around 5,295 customers moved for lower rates, compared with 1,930 remortgage cases in 2020. The average customer moved a balance of £135,529 from an interest rate of 5.1% to 3.6%, and the volume of cases accounted for 22% of all equity released used for debt repayment.

“Looking ahead, with customers having focusing on meeting pressing needs over the last 24 months, we anticipate that there will be pent up demand for discretionary spending amongst some over-55s who have found that their retirement is currently very different from what they anticipated.

“However, this is likely to be tempered by inflationary pressures and increasing numbers of customers seeking to boost their or their families spending power to meet rising household bills.”

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