£2.15bn year for equity release market sees annual growth rate double
The total value of equity release lending surpassed £2bn for the first time in 2016 marking a landmark year for the sector, according to the latest figures from the Equity Release Council.
Overall lending reached £2.15bn for the year, an increase of a third (34%) on 2015 with an additional £542m of lending activity: double the rate of growth from 2014 to 2015 (16% and £225m).
Marking the 25th anniversary of the first industry standards being introduced in 1991 to support a safe and reliable market for consumers, the sector also finished the year on a record quarterly high as lending increased 51% to £670m year-on-year across the last three months of 2016, from £445m in Q4 2015.
From October to December 2016, 8,303 new equity release plans were taken out: an increase of 12% from the previous quarter and up 30% year-on-year. The final quarter of 2016 also marked the first time since Q4 2006 that the number of new plans exceeded 8,000 in any single quarter. Overall new plans across 2016 stood at 27,563: the highest amount since 2008.
Lump sum growth outstrips drawdown in 2016
Lump sum lifetime mortgages proved popular in 2016, with the number of new plans agreed increasing by 26% year-on-year. This increase outstripped the rate of growth in drawdown products, which rose 19% by volume over the same period.
Drawdown products remain the most popular: the total number of new drawdown plans was 17,882 for the year, accounting for 65% of the market. However, the appeal of lump sum products saw them record their largest share by volume of new plans agreed (35%) since 2010, which is likely to be influenced by the use of housing wealth to repay mortgage debt as well as meeting clients other financial needs.
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