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With annual lending of over £4bn in 2021, the equity release industry is booming.
2022 appears to be another potential record-breaking year thus far, with 80% of experts predicting further growth. The question is, will these statistics hold?
We’re here to help you discover:
- An in-depth statistical analysis of the equity release market in 2021.
- A statistical evaluation of the 2022 equity release and property market.
Are you wondering how the equity release market is faring right now? Let’s find out 10 equity release statistics RIGHT NOW!
Has COVID-19 Effected Equity Release Statistics?
Like all industries, lockdown restrictions did negatively impact the equity release industry for a short time.
Lenders had less access to their clients, but most companies eventually implemented online appointments, a trend that has become the norm in a post-COVID world.
However, on a whole, the effects were hardly devastating, with the industry emerging barely unscathed.
Once lockdown restrictions lifted, the industry began to explode because it’s a financial service that helps older folks gain access to money, a much-needed commodity in a challenging economy.
1. An All Time Record of Equity was Unlocked
In 2021, the equity release industry hit a new record with £4.8bn in equity released by older homeowners, almost £1bn more than the previous year.
In total, the industry grew by 24%.
2. More Homeowners Turned to Equity Release in 2021
In 2021, 76,154 new and existing customers used equity release products. This is a 4% increase when compared to the total in 2020, which was 72,988.
3. Q4 2021 Had the Highest Number of New & Returning Customers That Year
Q4 is usually the time of the year when the most equity release loans are unlocked, with citizens looking for additional income during the festive season.
In Q4 of 2020, there were 19,333 new or returning customers, but the same time in 2021 saw 19,975 older homeowners unlocking the cash in their home.
This is an increase from 19,300 in the Q3 of 2021.
4. Over £1bn in Property Wealth unlocked in Q4 2021
Between October and December 2021, £1.34bn worth of property wealth was unlocked by new and existing customers.
£1.2bn was through new plans and £153m was through drawdowns or further advances. Q4 2021 was the record quarter of the year, beating Q2 that came in at 1.17bn.
5. Most Equity Unlocked in 2021 Was through New Plans
Of the £4.8bn that was lent in 2021, £4.3bn was through new plans and £500m to returning customers.
6. 2018 Was the Last Year That Equity Release Records Were Set, until Now
Annual lending in 2021 surpassed the last record that was set in 2018, which was £3.94bn.
This is a result of industry growth, further choices and competition, economic difficulties, and booming property prices.
7. The UK Property Industry is Booming
The average property price in the UK increased by £25,000 in the year, up to November of 2021.
8. More than 40,000 New Plans Were Unlocked in 2021
In 2021, 40,946 new customers signed up with a lender to release the cash tied into their home.
This is merely a 2% increase compared to the 40,337 of 2020.
Q4 was also the busiest quarter in this regard, with 11,566 new plans signed.
9. November Was the Busiest Month in 2021
4,164 new equity release plans were unlocked in November 2021, more than any other month in the year.
On the contrary, December was the quietest year, with 2,890 new plans.
10. Lump Sum Lifetime Mortgages Were the Most Popular Equity Release Plan in 2021
3 out of 5 new customers chose a drawdown lifetime mortgage in Q4 of 2021, the largest percentage that year and 59% more that in Q4 2020.
In 2021, lump sum lifetime mortgages made up 43% of all new plans agreed, matching 2020’s figures, which was the largest recorded annual portion of market activity since 2009, which was 44%.
11. An Increase in Total Borrowing in Q4 of 2021
Similar amounts of borrowing was agreed to by customers via drawdown and lump sum plans throughout 2021.
New drawdown plans of Q4 had an increased total borrowing of 18% compared to Q4 2020.
The average initial lump sum released was £96,699, with £35,532 put in a drawdown reserve facility. This is a total of £124,990.
New lump sum plan sizes have grown 20% over the same period to £125,911.
12. Existing Customers with Drawdown Lifetime Mortgages
7,571 existing customers unlocked cash from their drawdown reserved in Q4 of 2021, 5% less than Q3 2021.
The average equity unlocked by returning drawdown customers was £12,501 in Q4, more than the £11,476 in Q3.
In the whole of 2021, 30,521 returning drawdown customers withdrew funds.
This is more than the 28,902 in 2020, but short of the 36,426 record of 2019.
13. Further Plan Extensions
In Q4 2021, 1,391 extensions were made on existing equity release plans.
This is a a slight increase compared to 1,275 in Q3 2021 and 975 in Q4 2020.
Over the whole of 2021 4,669 customers agreed extensions to their existing plans, a reflection of rising property prices.
What Do These Statistics Mean for the Equity Release Market in 2022?
Despite the global economic5 effects of COVID-19, the equity release industry is still holding its own.
Any drops in figures quickly recovered when the economy re-opened.
With over 1-million UK residents needing to postpone their retirement due to Covid-19, more and more people are looking for ways to supplement their income in search of the means to retire stress-free.
Interestingly, 55% of all homeowners in the UK are over the age of 55.
In addition, almost 90% of low-income earning pensioners own their homes.
If you’re in that category, then you’re very likely considering equity release as a means to get by, particularly during these difficult post-COVID times.
The continuous thrive of the equity release market can likely be attributed to it being a financial support tool available in this challenging economic climate.
What Was the Equity Release Industry Worth in 2021?
The equity release industry hit an unprecedented £4bn in 2021.
How Popular is Equity Release?
The popularity of equity release is on the rise. According to data from the Equity Release Council (ERC), during the first half of 2021, 35,860 people unlocked more than £2.3 billion in property wealth between them.
What Percentage of Your House Can You Get with Equity Release?
You can get between 20% and 60% of your property value with an equity release.
How Many Borrows Opted For a Lump Sum Lifetime Mortgage in 2021?
Approximately 47% of new borrowers opted for a lump sum lifetime mortgage in 2021, making it the most popular form of equity release.
It’s safe to say that the equity release sector is still booming. In 2020, £3.89bn was unlocked, vastly lower than the record-breaking 2021 that the industry saw.
With people living longer on average, there is little wonder why this figure has increased so dramatically.
While equity release does have its pitfalls, with the rising cost of living, it could be the perfect way to help UK retirees relax in their golden years.
To find out more, get in touch with an independent financial adviser today!