Equity release market soars as pensioners withdraw £6.8m a day

Retired homeowners have withdrawn an average of £6.8m of property wealth through equity release so far this year, according to new analysis from over-55s finance specialist Key Retirement.

More than £1.58bn of property wealth has been released in the nine months to October compared with £1.71bn in the whole of 2015 with the past three months recording strong growth despite the Brexit vote, Key’s Q3 Equity Release Market Monitor shows.

People released £633.8m of property wealth in the third quarter up from £470.9m last year, largely because the number of homeowners using property wealth to enhance retirement living increased by 33% in the three months to the end of September compared with the corresponding period last year, while the total amount released rose by 35%.

Key’s Equity Release Market Monitor, which analyses data for Equity Release Council members and non-members, shows the growth in amounts being released is enabling homeowners to address a wider range of financial issues.

Around 82% of customers used some or all of the cash for home or garden improvements compared with 61% in the same period last year while 41% cleared credit card and loan debts compared with 30% last year. Some funded holidays in the past three months while 21% paid off mortgages.

Dean Mirfin, technical director at Key Retirement, said: “The equity release market has already almost matched the record performance of 2015 in just nine months highlighting how property wealth is enhancing retirement planning as other retirement income solutions are squeezed by historically low gilt and interest rates.

“The growth in the average amount released by retired homeowners is making a major difference to lifestyles with the detailed breakdown showing how most are using the cash to improve their homes while also being able to pay off debts and boost income.

“The market is on course for another record year with rate cuts for loans and new providers entering the market providing further momentum. The results also show that demand for tapping into housing equity is very much increasing throughout the UK with most regions recording record growth in plan numbers and total lending.”

Across the country nine out of 12 regions saw growth in the value of property wealth released with the West Midlands recording a 67% rise, East Midlands recording a 50% rise, and London a 48% increase. The only area to record a substantial fall was Scotland with an 18% decrease while Northern Ireland and the North West were virtually unchanged.

The biggest growth in plan sales was recorded in the West Midlands where total sales rose 59% followed by the East Midlands on 54% and East Anglia on 53%. Only Scotland reported a drop – sales were down 13% – while Northern Ireland and the North West were effectively unchanged.

Region Number of plans sold Q3 2016 Number of plans sold Q3 2015 Total value released Q3 2016 (£ million) Total value released Q3 2015  (£ million)
South East 2,302 1,628 £195,535,737 £141,969,635
London 957 669 £130,094,578 £87,636,938
South West 1,026 721 £75,985,792 £54,749,646
North West 702 724 £38,056,004 £38,998,806
East Anglia 544 355 £40,749,820 £27,654,035
East Midlands 679 441 £37,930,322 £25,354,608
West Midlands 620 390 £34,862,614 £20,905,460
Scotland 449 517 £23,883,680 £29,282,261
   Yorkshire & Humberside 479 376 £25,386,209 £17,234,733
Wales 311 228 £17,322,169 £13,403,516
North East 213 183 £11,041,682 £10,719,302
Northern Ireland 66 66 £2,910,169 £2,996,933
UK 8,348 6,297 £633,758,238 £470,905,872

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Written by: Houseladder