The latest industry figures from the Equity Release Council have indicated that the total value of equity release lending reached a record £1.38bn in 2014, exceeding the previous high of £1.21bn in 2007 by 14%.
The number of new equity release customers also broke records for 2014, with more than 5,700 over-55s releasing equity from their homes during the last quarter; the largest amount in a three month period for over six years.
ERC’s figures showed the value of equity release lending totalled £365.7m in the fourth quarter, up 18 per cent from £310.2m in the same period during 2013.
The total for 2014 also sees a 29 % increase from 2013, bringing the equity release market back to above pre-recession levels, as homeowners aged 55+ increasingly use their housing wealth to help with living costs in later life.
The average value of equity release lending also hit a new milestone in 2014, reaching £64,787 which is an increase of 14% from 2013, exceeding the previous record of £60,504 in 1998 by 7%.
Two-thirds of new equity release customers chose drawdown products in 2014, in contrast to just 25% of customers in 2006. Lump sum products now account for 34% of new plans, while home reversion account for less than 1%.
Drawdown products do however account for a smaller share of the market by value – 60% or £825m during 2014, as these products allow retirees to take smaller sums when they need them which often allows for more housing wealth to be preserved.
The chairman of the Equity Release Council, Nigel Waterson, said that the figures showed that equity release is proving to be a crucial tool for financial planning in retirement.
“The new pension freedoms won’t change the fact that many people do not have enough savings for later life. There is a danger that people’s pension pots will be ‘here today, gone tomorrow’ – but housing wealth is the one constant that many in this generation can rely on for support.
“Increasing awareness of the available products and their benefits means that equity release will continue to thrive in 2015 and bring more help to our ageing population. Continued collaboration with all those in the sector, including the regulator and government, will support further innovations and maintain consumer protections.
“With talk of mainstream lenders and new offers arriving in the market, we anticipate big things for equity release in the year ahead,” he added.[/fusion_text]
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