The market is expected to grow by a further 28% to £2.75bn in 2017 in what it described as a ‘conservative’ estimate.
Equity release lending reached £2.1bn in 2016 after growing by 26% year-on-year according to Key Retirement’s Market Monitor report.
What is more the market is expected to grow by a further 28% to £2.75bn in 2017 in what it described as a ‘conservative’ estimate.
Dean Mirfin, technical director at Key Retirement, said: “The equity release market has broken through the £2bn barrier for the first time and has more than doubled in value in just five years, highlighting how property wealth is making a huge contribution to retirement planning.
“The average amount being released by retired homeowners at nearly £78,000 underlines that property wealth can help with a number of issues for customers, ranging from improving their homes and going on holiday to helping family and clearing debt.”
He reported the current pipeline of business being at its highest ever level, adding: “The trajectory in the market has been quite phenomenal.
“The last quarter of the year has been by far one of the strongest we’ve ever seen – and that’s new written business that hasn’t completed yet.”
The number of new plans rose by 17% to around 27,666 in 2016, while this is expected to rise again by 19% to 33,000 in 2017.
Mirfin called the estimates conservative because Key Retirement failed to factor in demand from an estimated 20,000 borrowers seeing their interest-only deals mature this year.
With Santander referring clients on interest-only mortgages to Key Retirement, if more lenders follow in its footsteps Mirfin expected the market to be even bigger than £2.75bn.
He said: “That could be very conservative because what isn’t factored into that at all is interest-only borrowers– at the moment they are not finding us enough on their own.
“Those interest-only maturities are heavily relying on their lenders to help them. If more providers do what Santander has done then we will see this sector grow even more.
“We believe that customers who an equity release solution will resolve their interest-only problem in 2017 is around 20,000 borrowers.
“For some there may be better solutions, other alternatives they may be happy with, so we are not saying that we are going to see 20,000 in equity release. But if lenders get better at signposting those people that will have a marked increase in the market and that’s above current demand.”
