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Equity Release Expands to more than £3.6 Billion as Gifting Grows

16 January 2019

EQUITY RELEASE EXPANDS TO MORE THAN £3.6 BILLION AS GIFTING GROWS
 
  • More than one in four retired homeowners are giving money to family and friends
 
  • Plan sales rise by 21% and value released by 19%, Key’s 2018 Equity Release Market Monitor shows
 
Download the full report at: www.keyadvice.co.uk/about/market-monitor
 
Retired homeowners released £3.6 billion in new property wealth last year as the market doubled in size in just three years, new data from the UK’s leading independent equity release adviser Key reveals.   When further advances and additional drawdown are taken into account**, the market is getting close to £4 billion.   
 

 
Homes paid out nearly £10 million a day in 2018 with customers releasing an average £76,500 to improve their standard of living in retirement.  Plan sales rose by 21% in the year to 47,081 and new lending increased by £586 million to a new record high of £3.6 billion – more than double the £1.71 billion level achieved in 2015, Key’s 2018 Equity Release Market Monitor shows.  
 
Equity Benefits The Wider Family:
The number of customers using money to help families rose to 27% from 24% the previous year highlighting how property wealth is increasingly supporting a wider range of financial needs for retired people. Money gifted to family and friends is typically being used to clear debts, pay for significant life events such as weddings or to fund house deposits. Key’s figures show other major uses of gifts are to pay for large family holidays, fund university fees or buy cars.
 
The most popular use remains funding home and garden improvements with 64% re-investing some or all the money in their houses – often to “age-proof” the property.  Around one in three (33%) paid for holidays and 31% used some or all the cash to clear credit cards or loans while 22% paid off existing mortgages.
 
 All areas of the country recorded strong growth in plan sales and value released with Londoners receiving the biggest cash boost at £136,850. Total value released in the South East during the year exceeded £1 billion for the first time [see table below].
 
Drawdown plans remained the biggest sellers accounting for around two thirds (64%) of all sales, including 15% in enhanced drawdown which offers enhanced terms to people with health or lifestyle conditions. In 2018, customers reserved £1.46 in funds using these products. Lump sum lifetime mortgages made up 36% of sales, including 13% of enhanced plans.
 
Will Hale, CEO at Key, said: “The equity release market recorded another strong year of growth in new lending taking it to £3.6 billion and has doubled in size in three years demonstrating how important it is to retirement planning. Once further advances and additional drawdown is included it is getting close to £4 billion.
 
“The growth in gifting highlights the intergenerational benefits of equity release for families with money being used to clear debts, fund university fees and pay for house deposits and weddings. Even the use of equity release to fund home and garden improvements has benefits for families as it helps people to ‘age-proof’ their home and preserve wealth for the family.
 
“Debt remains however a major issue for some retired people and substantial numbers are relying on equity release to clear credit cards and loans as well as paying off mortgages.  Good specialist advice is key to ensuring that older homeowners receive the most benefit from their property wealth and use it in the most appropriate way for them and their families.”
 
Around the country
Key’s Equity Release Market Monitor, which analyses its data reflecting both Equity Release Council members and non-members, found the biggest increase in value released was in Scotland where total value rose by nearly 38%. The West Midlands, Yorkshire & Humberside and Wales all recorded major gains.
 
Northern Ireland saw the biggest increase in plan sales with a 47% rise during the year while the North East, West Midlands and Yorkshire & Humberside all saw strong increases year-on-year.
 
Region Number of plans sold 2018 Number of plans sold 2017 Total value of new equity released 2018 (£ million) Total value of new equity released 2017 (£ million)
South East 11,777 10,504 £1,047 £953.601
London 4,850 4,172 £663.715 £557.742
South West 5,546 4,907 £420.952 £373.936
North West 4,223 3,245 £242.186 £183.760
East Anglia 3,446 2,947 £242.062 £206.16
East Midlands 4,088 3,164 £244.208 £194.45
West Midlands 3,627 2,727 £222.771 £163.009
Yorkshire & Humberside 2,988 2,244 £164.222 £120.801
Scotland 2,596 2,058 £138.561 £100.804
Wales 2,073 1,628 £119.565 £88.085
North East 1,438 1,071 £74.789 £56.946
Northern Ireland 427 291 £19.452 £15.048
UK 47,081 38,955 £3,600 £3,014
 
 
Anyone looking to release equity from their home can get Key’s independent guide to equity release by calling 0800 531 6027 or visiting https://www.keyadvice.co.uk/equity-release/is-it-right-for-me