Equity release £1bn boom
Industry experts are predicting the total funds released through the equity release market will surpass the £1bn this year.
A strong third quarter saw 5,260 equity release plans sold - a year-on-year increase of 10 per cent – and total lending reach £256.6m. This figure would have reached £383m if untapped drawdown funds were included.
In 2011, £959.6m of equity was released; the first year of growth since 2007. There are now high expectation this year’s activity will exceed this.
This potential milestone does not come as a huge surprise; a potent combination of baby boomers approaching retirement with significant unsecured debts and interest-only mortgages requiring repayment means many people are turning to equity release to defuse the situation. Just under a fifth of customers were believed to have used some, if not all, of the funds released to pay off their outstanding mortgage.
The equity release market is developing to provide such a solution, launching plans purposefully designed to overcome the interest-only conundrum.
Despite this the majority of people are still using equity release for home improvements (53%). 29% put the money towards a holiday while almost a third of retirees are turning to equity release as a way to help out their family to clear debt or with a deposit of their own property.
Content correct at time of publication