In 2021, the average equity release client drew more than seven years of retirement income from their home.
Imagine accessing so much money?
Here is a summary of everything that happened according to the Equity Release Council’s Spring 2022 market report1.
Q2 Property Wealth Reaches a Record High For UK Homeowners
With UK property wealth hitting a record £5.2 trillion by the end of last year, consumers in the equity release market withdrew an average of £125,000 as a single lump payment or in gradual ‘drawdowns.’
According to the Council’s calculations, this figure is comparable to more than 7 years of a typical senior’s net income and over 4 years for a typical pensioner couple.
The average customer still unlocked less than a 3rd of their total property wealth across drawdown and lump sum products.
The Equity Release Market Continues to Grow
Because of the equity release market’s resurgence, it’s currently 6x larger than it was in 2011.
300 Equity Release Products Available at Rates of 4% Or Less
According to the market report, product prices increased from 3.95% in January 2021 to 4.16% in January 2022.
However, more than 300 products are currently accessible at rates of 4% or less, and the typical consumer got a loan at a rate of 3.39% during H2 2021.
In Q2, Clients May Still Save £30,000 Compared to 2016
With the average interest rate for equity release products remaining more than 2% lower than in January 2016,
today’s consumers would save more than £30,000 in interest costs when borrowing £100,000 over a decade, compared to 6 years ago.
Customers Can Enjoy Low-Interest Rates & Increased Product Flexibility
More customers can access potentially life-changing sums with more significant methods to manage the overall cost of borrowing in later life, thanks to low-interest rates and increased product flexibility.
An Increase in Products That Provide Penalty-Free Portion Repayments & Downsizing Protection.
More products added the ability to make voluntary penalty-free partial repayments in the second half of the year, with 85% of products permitting this in January 2022 compared to 68% in July 2021.
New ‘Product Standard’ Being Implemented by Council March 28, 2022
On March 28, a 5th product standard was added to the 4 created 30 years ago to form the foundation of the current equity release industry market.
Changes to reflect:
- The right for customers to remain living in their homes for life.
- A fixed or capped interest rate for life.
- A no negative equity guarantee.
- The right to port (move) their loan to another property.
- The right to make voluntary penalty-free partial repayments.
The Product Selection Remains 3x Larger Than It Was in January 2019.
The number of product possibilities decreased somewhat from 668 in July 2021 to 665 in January 2022.
Compared to 2019, there are now more than 3x as many items accessible to meet the demands of various clients.
Growth in Product Offering Downsizing Protection For Equity Releasers
The number of products offering downsizing protection, which allows clients to repay their debts in full with no early repayment penalty if they downsize , grew from 50% in July 2021 to 63% in January 2022.
Lifetime Mortgage Contributes 6x the Amount to Later Life Lending Overall Than in 2021
Lifetime Mortgage equity release loan activity in 2021 was 6x higher than in 2011 (£4.8 billion vs £789 million),
with product selection has tripled in the past 3 years alone (665 in Jan 2022 vs 202 in Jan 2019).
Lifetime Mortgage Still the Most Preferred Loan for Ages 55 – 65
Since the end of 2019, lifetime mortgages have accounted for around a quarter of new loans by customers aged 55+ and 3-quarters of those taken out by customers aged 65+.
Property Market Activity Shows the Total Value of UK Housing Reached £6.7 Trillion at the End of 2021
Growing by £1.6 billion each day on average, or £1 million per minute. When mortgage debt is taken into account, the country has a historic £5.2 trillion in property worth, equating to £211,000 per family.
Got Questions? Check These First
What Is the Equity Release Council?
The Equity Release Council is a governing body that oversees the industry and ensures the protection of older borrowers.
How Often Does the Equity Release Council Release a Report?
The Equity Release Council releases a report every quarter. The total is 4 reports per year, detailing the latest industry news and statistics.
Despite increased interest rates, the industry continues to boom. With further flexibility and new product guarantees, the history of equity release looks bright.
What’s more, UK-based property wealth is on the up, so you might live in a gold mine.