Green shoots of recovery are emerging in the equity release market despite subdued lending this year, the Equity Release Council has said.
The green shoots have appeared in the form of product availability in the equity release market, which has rebounded throughout this year.
The council’s analysis of data from AdviseWise reveals there were 212 more product launches than withdrawals – totalling 4,083 and 3,871 respectively – between August and October.
Rates have also stabilised, with the average APR for a new lifetime mortgage product reaching a year low of 6.31% in September this year.
This is an improvement on the 7%-plus averages seen last year.
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Regional growth
The data also revealed that the number of people taking out lifetime mortgages has grown across every UK region except the North East.
Eight out of 12 regions registered double-digit growth between 2014 and 2023.
Wales saw an increase of 44%, while the East Midlands was up 23% and the East of England was up 21%.
Comparing the regional spread of those taking out lifetime mortgages to the split of over-55s’ property wealth, the South East – with 21% of property wealth versus 12% of completions – and London – 12% versus 9% respectively – are under-indexed, with a lower share of completions than property wealth.
Northern Ireland, at 2% versus 1%, is also under-indexed.
Of the remaining regions, eight outperformed. The South West – at 18% of equity release cases versus 11% of property wealth – led the pack, along with the East Midlands – 9% versus 7% – and North West – 10% versus 9%.
Meanwhile, the total number of mortgage completions by people aged at least 56 years old has dropped from 175,260 in 2005 to 84,576 last year, new figures have revealed.
The council said the number of people aged above 56 has grown by 31% since 2005 to almost 21 million.
In 2005, there was one loan completion for every 91 people aged 56 or over.
This ratio has fallen, with 2023 seeing just one completion per 246 people of this age.
It comes at a time of significant product innovation in the mortgage market.
There are now more flexible lifetime mortgages, including mandatory payment plans emerging alongside a variety of retirement mortgages.
David Burrowes, chair of the Equity Release Council, said: “While lending volumes may be subdued for now, there is no denying the giant strides that have been made in equity release product design and distribution, advice and public perceptions in the post-regulation era.
“We know the current recovery will be a gradual process with no overnight return to the £6bn-plus market of recent years.
“At the same time, the potential is there to go far beyond this high watermark in the future, and it’s important we turn this reset period into a positive. Property wealth has long been one of the most significant assets available to UK households.
“Advances in lifetime mortgage product design have made it significantly more attractive to access and are likely to be seen in years to come as a major milestone in bridging the gap between residential homeowner mortgages and the later life market.”
He continued: “The pause in growth provides a chance to focus on the next steps needed to create the sustainable later life mortgage market of the future, which our ageing population sorely needs.
“In a climate of growing pension challenges, property wealth will play a crucial role in bridging the gap between aspirations and affordability in later life.”
The council is focused on working with the industry, regulators and policymakers to ensure consumers receive the best advice and make informed decisions.
Earlier this month, it was revealed that equity release can almost double retirement savings.
