In the equity release market, new plans agreed and total lending rose for a second successive quarter for the first time in two years, research from the Equity Release Council found.
The ERC’s quarterly market report found homeowners over the age of 55 withdrew £615mn of property wealth from their homes between July and September, a 6 per cent increase from Q2 2024.
With the number of new plans agreed rising by 2 per cent to 5,730 over the same period, Q3 became the first time since before the mini-budget when the equity release market has seen two successive quarters of growth.
ERC chair, David Burrowes, said: “Returning growth may have been modest to date, but it’s particularly encouraging to see the trend continue during the transition period sandwiched between the arrival of a new government and its first budget statement.
“Behind these improving numbers are reports from both advisers and providers alike that consumer confidence is steadily returning.
“That may not translate into an uninterrupted upwards trajectory from here, but we know there are many households who have decided that releasing equity is right for them and are now focused on ensuring the timing is also right.”
Additionally, the research found that average loan sizes increased modestly, with new lump sum lifetime mortgage customers taking £111,618 while those taking drawdown lifetime mortgages took £69,952 upfront and reserved another £49,747 for future use.
A 8 per cent rise in existing customers taking further advances to extend their loans was a sign of customers having sufficient equity remaining in their homes, helped by UK house prices having risen year-on-year for six months in a row, since February 2024.
“Housing wealth continues to play a multi-purpose role in people’s financial plans, with mortgage refinancing, gifting and home improvements all common motivations for customers at the moment, alongside topping up retirement income,” Burrowes added.
“New customers who need to press ahead have the use of flexible repayment options to manage their borrowing, while people with less pressing needs are watching and waiting to see the future path of interest rates.
“To further support homeowners' borrowing ambitions, product development teams have been busy adding to the flexible features and criteria available for loan-to-values, interest payments, and early repayment charges.
“As we head towards the end of the year, we anticipate that we will continue to see steady growth if interest rates remain stable and consumer confidence responds positively to the forthcoming budget.”
tom.dunstan@ft.com
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