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22 Apr 2020

Residential Property

More borrowers are unlocking cash through equity release, according to latest figures

As latest statistics show that older borrowers unlocked £1.81 billion of cash from their homes in the second half of 2019, our Head of Residential Conveyancing, Wyn Williams, examines why equity release is becoming increasingly important in retirement planning.

According to the Equity Release Council’s Spring Market Report, more than 44,000 borrowers took out equity release in the period from July to December, significantly higher than customer numbers in the first half of the year, which reached 41,263.

Overall, the market’s performance in the second half of last year took the total amount of equity lending for the year to £3.92 billion, which remains flat on lending figures in 2018.

The wider later life market continued to expand as total sales of all mortgage products to customers aged 56+ rose by 25,212 between H1 2015 and H1 2019. This suggests that increasing numbers of consumers are accessing wider options in the residential as well as lifetime mortgage markets to meet their later life needs.

The 2019 market was buoyed by strong competition and reinforced by robust safeguards. Equity release product choice continued to increase, with a nine per cent rise in options in the last six months of the year, taking the number of available products to over 300.

This increased competition in the market has seen average equity release rates drop to a record low of 4.48% in January 2020, and two out of five products now have rates lower than 4%. More products on the market now offer interest-serviced options, partial repayment flexibilities and downsizing protection.

Interestingly, 63% of new customers opted for drawdown lifetime mortgage products, taking smaller amounts up-front than lump-sum products. And the average age of new drawdown customers rose to 70.6 years in H2, the highest figure for two and a half years.

With uncertainty surrounding the housing market looking likely to continue for some time, we feel sure that unlocking property wealth will continue to play a role in the months and years to come, particularly for the older generation.

At Harding Evans we can provide expert advice on whether equity release might be an option worth considering. It can be a great way of letting you enjoy some of the cash that would be generated by selling your home, without actually selling it. But there are various legal complexities so it is essential to seek professional legal advice to consider things that you might otherwise overlook.

Get in touch…

Get in touch with our team by contacting our Newport office on 01633 235145 or our Cardiff office on 029 226 76819, who will be happy to answer any questions that you may have.

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