Equity release customer numbers rose by 12 per cent in the second quarter of the year driving an increase in lending, data from the Equity Release Council has revealed.
The ERC’s latest quarterly market report for Q2 2024, reported a double digit rise in the number of customers taking out new products.
This growth was echoed in total lending which rose by 15 per cent in the second quarter of the year to £578mn.
Both the total number of customers served and total lending activity contributed to Q2 2024 being the “busiest quarter for almost a year for the equity release market”.
Equity Release Council chair, David Burrowes, said: “Following a period of economic uncertainty, we are starting to see consumer confidence gradually return to the market.
“The pick-up in activity between the first and second quarters is a welcome rehearsal of the downward trend seen one year ago.
“There is a long way to go to unlock the market’s full potential, but there are reassuring signs in these figures that we are turning the corner and acclimatising to this unfamiliar interest rate environment after years of rock-bottom rates.”
Drawdown
Additionally, the report found that existing drawdown customers, who are allocated a cash reserve when they first take equity release, continued to make use of this facility.
A 3 per cent increase to 8,051 returning to drawdown customers during Q2 made this the most resilient part of the market when comparing activity year-on-year.
Increases in average loan sizes on both a quarterly and annual basis offer another sign of returning customer confidence.
New drawdown customers are making larger initial withdrawals and reducing the amount held in reserve.
Burrowes added: “Almost 20 years on from their introduction, it’s notable that drawdown products are becoming the majority preference once again.
“Some of the new flexibilities embedded into the modern market such as fixed early repayment charges are equally designed for the long-term and set up so that customers can benefit from years to come.
“Adviser feedback suggests customers are continuing to find a variety of uses for their property wealth, with gifting and funding home improvements both key motives behind activity in Q2 along with boosting everyday income and closing pension shortfalls.”
However, Burrowes pointed out that refinancing an existing mortgage, including interest-only loans, continues to rank as the biggest driver of current market activity.
“The innovative design of modern lifetime mortgages means anyone taking this route will have lots of ways to smooth the transition, not least the freedom to make repayments when they can afford to without the risk of repossession looming over them,” he added.
The council’s data is “unique” in that it is made up of aggregated figures collected from all UK equity release providers, encompassing business from advice firms across the market.
tom.dunstan@ft.com
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