The rise and rise of Equity Release continues with a more-than-doubling of the number of product options on the market in the course of two years.
A new report from the Equity Release Council, an industry umbrella body, says there were 139 ER products available in August of this year, compared to just 58 available two years earlier.
The council also says that for every £1 of savings withdrawn via flexible pension payments in the last 12 months, 50p of housing wealth was unlocked via equity release – up from 40p a year earlier.
Meanwhile the number of equity release customers has also soared - up by 81 per cent from the first half of 2016 to the first half of 2018, prompting the surge in the number of ER products.
In a bid to win more customers - who may well otherwise have downsized their homes to release equity - many of the newer ER products allow consumers to make ad-hoc, penalty-free voluntary or partial repayments of their loan. Some other lifetime mortgages have what the equity release industry call ‘ringfenced equity’ - this means owners can retain some of the value of their property as a guaranteed minimum inheritance.
A total of 38,912 households aged 55 and over used ER products from Equity Release Council member companies in the first half of this year.
This included 21,490 new plans agreed, up by 28 per cent from 16,805 a year earlier.
Throughout H1 2018, the average house price among ER customers were above the latest UK average house price of £228,384.
“These figures highlight the rise in new products and increased product flexibility … this innovation has brought more competition to the later life lending arena, while maintaining the standards and protections which ensure equity release products are futureproofed to provide good outcomes for consumers” says David Burrowes, chairman of the Equity Release Council.
However, Plymouth estate agent Andrew Bullivant of the city’s branch of Attwell Martin has spoken out strongly against ER being allowed to take place without any tax being applied - whereas transaction taxes like stamp duty can be a deterrent to downsizers.
“Over 55s are selling the family silver faster than ever before” he says, expressing concern that their impact is to reduce the availability of homes on the market.