Over 55s Lead Record Rise In Equity Release
Total lending based off the value of large assets such as houses increases to a record amount.
The Equity Release Council are reporting that in the second quarter of 2016 wealth being released by over 55s passed the £500m mark for the very first time reaching £514.4m.
The second quarter of 2016 saw the highest growth rate in new plans agreed between clients and providers since the third quarter of 2003, increasing at a rate of 23%. The 3 highest ever recorded rates of equity release have occurred in the last year.
Reasons Behind The Rise
An ageing population and increasing house prices have contributed significantly to this demand.
E.R.C. chairman Nigel Waterson says that the market has stepped up to meet the demands of this growing number of people wishing to use their assets to access cash.
Regulator legislation in April has also added to the numerous new providers and products in sustaining this boom. Optional interest repayments have become exempt from mortgage affordability rules.
Lifetime mortgages that provide a large lump sum rose 37% from £152.1m to £208.8m. Drawdown lifetime mortgages, allowing multiple withdrawals of money however still account for the larger sector of the market, up 31% from £231.6m to 304.0m. This was the greatest annual jump since 2012 when the country was recovering from recession.
Total market activity has risen markedly. More than 2 out of 3 current lifetime mortgages are drawdown, up from 65%. This means that despite growing at a faster percentage, the proportion of single lump sum lifetime mortgages actually went down slightly from 35% to 1 of 3.
Home reversion plans in the second quarter of his year has more than doubled the same period last year from £623,647 to £1.5m.
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