Statistics from the Equity Release Council highlight the trends seen in the market last year [1].
Less lending
According to the report, annual lending totalled £2.6bn in 2023 – significantly lower than the record-breaking £6.2bn seen in 2022. This returned the equity release market to a level of activity that was last seen between 2016-2017 (£2.1bn to £3.1bn).
Fewer new customers
The decline in lending is partly due to a drop in the number of new equity release customers. In 2023, the number of new plans agreed decreased by 47% year-on-year to 26,119. Those that did enter the market were also borrowing less – the average new lump sum customer reduced their loan size by 26%, making last year the first time since 2019 that this kind of borrowing was below £100,000.
Preferences changing
In 2022, lump sum lifetime mortgages made up 52% of new product sales. This trend was reversed last year, with 53% opting for the flexibility of a drawdown lifetime mortgage.
Expert opinion
Chair of the Equity Release Council, David Burrowes, commented, “Every corner of the mortgage market saw rising interest rates put the brakes on activity in 2023, and equity release was no exception with customers and their advisers taking a cautious approach. This resulted in loan sizes shrinking and fewer people borrowing for more aspirational reasons.”
[1] ERC, 2024
🚨 Data accurate as of the date of publication –19.06.2024
🚨Equity Release and Lifetime Mortgages will reduce the value of your estate and can affect your eligibility for means-tested benefits.
🚨Information within this blog is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed.
🚨Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
🚨 The above material is for informational purposes only and does not constitute a sales offer or financial advice. Before taking out any insurance, credit agreement or other financial product, you should obtain individual advice on your requirements and the general terms of the contract.
Source: Quilter Financial Planning – Essentially Mortgages Q2 2024
