Average Age of New Customers Edges Up As More Couples Opt For Equity Release
The average age of equity release customers increased slightly once again in H2 2016, rising from 69.9 to 70.1. This is a second successive rise over a half-year period and brings the average customer’s age back level with that of H1 2015. The ages of both lump sum and drawdown customers increased by around a year compared with H2 2015. Lump sum customers were typically aged 68.2, up from 67.2 in H2 2015, while the average age of drawdown customers increased from 70.9 to 71.7.
The most common age at which people take out an equity release plan remains between 65 and 74 – typically the first decade of retirement – with 54.5% of all customers falling into this range in H2 2016. However, this was lower than in the first half of the year when it stood 56.4%, and significantly below the H1 2015 high of 57.9%. The proportion of customers aged 55-64 remained relatively stable at 21.3% in H2 2016, marginally higher than the 21.2% recorded in the first half of 2016. This is also higher than the levels seen in 2014 and early 2015, suggesting equity release’s popularity is growing among younger customers.
However, the proportion of older customers aged increased more visibly in H2 2016. Those aged 75-84 increased from 19.4% in H1 2016 to 20.2%, while those aged 85+ increased from 3.0% to 4.1% as the market grew – showing more customers are waiting until later in life to tap into their housing wealth. With almost half of new equity release plans agreed either before a customer reaches the old Default Retirement Age of 65 or after they turn 75, the data suggests that housing wealth is being used flexibly at various stages of later life and for a range of different purposes.
A more detailed look at product choices shows that the falling percentage of customers aged 65- 74 was seen across both drawdown and lump sum lifetime mortgages. In the case of drawdown, the proportion aged 55-64 also fell, meaning that 28.6% of drawdown customers in H2 2016 were aged 75 or older – two percentage points higher than in H1 (26.6%). However, lump sum customers were more polarised: the percentage aged 75+ grew from 14.2% to 15.4%, while the percentage aged 55-64 also grew from 33.2% to 35.9%. This is likely to be influenced by the variety of uses people make of their housing wealth – from paying off interest only mortgages to providing an early inheritance to family members.
The second half of 2016 saw a noticeable increase in the number of new plans taken out by customers who were either married or cohabiting, which reached 71.7%: the highest level since The Council began tracking this in 2014. Accordingly, the proportion of customers who are single, separated, divorced or widowed fell to 28.3%. Among plans held by single customers, the percentage held by single females rose to 66.7% in H2 2016, the highest point in two years.