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Equity release lending rises 17% to £753 million as market expansion continues

14 July 2015

EQUITY RELEASE LENDING RISES 17%TO £753 MILLION AS MARKET EXPANSION CONTINUES

  • Average amount released rises to £68,500, Key Retirement's Half Year Equity Release Market Monitor shows

 Download the full report at:  www.keyadvice.co.uk/about/market-monitor

Retired homeowners cashed in more than £750 million of property wealth in the first six months of the year as the equity release market continued to expand, analysis from leading over-55s finance specialist Key Retirement shows.

The average customer released nearly £68,500 - an increase of £3,500 on the same period last year - highlighting pensioners' confidence in using property wealth for retirement planning. The detailed findings reveal the wide regional variances ranging from average releases in the North West of over £53,000 to over £142,000 in London.

Key's Equity Release Market Monitor shows total property wealth released in the six months rose 17% to £753 million from £641 million and total number of plans climbed 10% to 11,007 from 10,013.

The money is being used to boost standards of living in retirement with 58% of customers using some or all of their cash to improve their home or garden while 28% have used their property wealth to pay for holidays.

Family and friends are also benefiting from retired homeowners' property wealth with 25% of over-55s handing out cash to relatives.

However mortgage debt - including interest-only loans - is emerging as a major issue with 23% of customers paying off home loans with some or all of the money, compared to 20% for the same period of 2014. Around 29% also used the cash to pay off credit cards or loans.

Equity release customers are getting older - the average age rose to 71 in 2015, from 69 previously - but they are also wealthier thanks to house price rises with average property values rising 9% to £271,248 from £249,108.

Dean Mirfin, technical director at Key www.keyadvice.co.uk), said:   "Property wealth is making a massive contribution to retirement planning and the equity release market is growing rapidly in response with double-digit growth.

"The average amounts released at £68,500 are more than 50% bigger than the average pension pot and are also tax-free highlighting the advantages of using property wealth in retirement.

"Cuts in pension allowances and contribution levels plus the review of pension tax treatment underlines that property investments are major assets which should be considered as part of anyone's retirement planning."

Across the country eight out of 12 regions saw growth in the value of property wealth released with the North East recording a 50% rise, the South East 35% and London a 30% increase. The value released dropped 13% in the North West. Eight out of 12 regions recorded rises in plan sales with three virtually unchanged. London saw a 28% rise and the North East a 31% increase.
 
Region Number of plans sold H1 2015 Number of plans sold H1 2014 Total value released H1 2015  (£ million) Total value released H1 2014  (£ million)
South East 2,627 2,183 £212,743,258 £157,017,309
London 1,211 948 £152,021,282 £116,974,867
South West 1,302 1,257 £85,125,883 £88,140,160
North West 957 1,085 £45,171,630 £52,136,100
East Anglia 649 568 £37,260,422 £31,427,238
East Midlands 800 801 £40,599,629 £41,389,902
West Midlands 776 846 £43,937,381 £43,085,334
Scotland 843 718 £42,077,174 £33,614,882
   Yorkshire & Humberside 894 785 £45,238,909 £37,448,310
Wales 398 348 £20,085,543 £19,046,536
North East 438 335 £23,365,779 £15,620,702
Northern Ireland 110 140 £5,830,127 £5,900,382
UK 11,007 10,013 £753,457,017 £641,801,722

Around 63% of all sales were drawdown plans, including enhanced drawdown which offers enhanced terms to people with health or lifestyle conditions, compared with 37% from lump sum single advance lifetime mortgages including enhanced products.

Anyone looking to release equity from their home can get Key's independent guide to equity release by calling 0800 531 6027 or visiting www.keyadvice.co.uk/equity-release/request-a-free-guide

Download the full report at:  www.keyadvice.co.uk/about/market-monitor