In this article we will bring you the latest equity release news from the Equity Release Council; published quarterly.
Q3 2022 equity release sales reach record highs
Summer 2022 has been a record breaking quarter for new equity release sales according to the latest Equity Release Council Q3 market report, as plans surpass 13,000 for the first time. A record 13,452 homeowners aged 55 and over released equity from their home with a lifetime mortgage, showing an increase of 8% compared to the previous quarter.
The number of returning equity release plan holders also increased, as 9,648 drawdown customers accessed money from their cash reserves. With a further 2,419 arranging further advances, buoyed up by the rise in property prices.
As a result, 25,519 customers actively released money throughout July to August, meaning a total lending record of £1.71bn.
Here’s a closer look at the market activity in more detail:
Equity release Q3 2022 - new customers
The record number of new equity release customers showed an 8% increase compared to Q2 and an annual rise of 34% against the same period in 2021. August was the busiest month and the divide between the different types of lifetime mortgage was almost equally split, with 52% of new customers choosing a lump sum and 48% opting for a drawdown lifetime mortgage.
Loan size was also fairly consistent with the previous quarter but 10% higher than 2021, a figure that mirrors inflation as reported by the Office of National Statistics.
And as drawdown customers took advantage of the rise in property prices, the average cash reserve grew 41% from £34,406 to £48,485.
Equity release Q3 2022 - existing customers
After a slight dip in Q2, the number of returning equity release customers increased from 9,305 to 9,648, showing a year on year increase of 21%. The amount of cash plan holders released from cash reserves was also up by 17%, averaging £14,444.
Increases were also seen in the 2,419 customers looking for a further advance, which can again be linked to rising property prices. The 1,291 opting for a lump sum released an average of £32,401 whilst remaining drawdown customers took an average lump sum of £18,833, holding £8,158 in reserve.
What do the Equity Release Council say about this quarters report?
Speaking on the latest 2022 equity release market report, chair David Burrows said “The summer months have seen the equity release market resume its pre-pandemic growth trajectory, with extra protections having been added in the intervening years so all new customers can make voluntary repayments when they can afford to and reduce their overall costs.”
He went on to say, “While recent turbulence in financial markets have added to upward pressure on interest rates, product flexibilities and stringent safeguards mean modern equity release remains the most secure and adaptable way to access the money tied up in your home without giving up ownership or risking repossession through fixed repayment commitments”.
“With the value of UK homes having passed £7trillion, people are increasingly inclined to put their property wealth to work in later life to support themselves and family in the here-and-now.
Equity release market report summary
Q3 2022 has been a bumper period for equity release as homeowners’ cash in on the rise in property wealth and the last few weeks of lower interest rates. However, the downturn in the economy as referenced by David Burrows has impacted interest rates and product availability alike, attributing to the 10% reduction in sales seen throughout September.
So, the next quarter may have a very different feel as the market waits to see what happens next with the economy and how far interest rates will rise.