Total lending hits £578 million in Q2
New equity release customer numbers rose by 12% in the second quarter of the year compared to the previous quarter, with total lending rising by 15% to £578 million, the Equity Release Council’s latest quarterly market report has revealed.
The council said Q2 2024 marked the busiest quarter in almost a year for the equity release market, driven by a double-digit rise in new customers.
Existing drawdown customers, who receive a cash reserve upon initiating equity release, also continued to utilise this facility. Returning drawdown customers increased by 3% to 8,051 in Q2, showing resilience in this market segment year-on-year.
Average loan sizes also increased both quarterly and annually, indicating rising customer confidence. New drawdown customers are making larger initial withdrawals and reducing the amounts held in reserve.
“Following a period of economic uncertainty, we are starting to see consumer confidence gradually return to the market with increasing numbers of new customers choosing to use their housing equity to support their needs in later life,” said David Burrowes (pictured), chair of the Equity Release Council. “The pick-up in activity between the first and second quarters is a welcome reversal of the downward trend seen one year ago.
“There is a long way to go to unlock the market’s full potential, but there are reassuring signs in these figures that we are turning the corner and acclimatising to this unfamiliar interest-rate environment after years of rock-bottom rates.”
Burrowes noted that almost 20 years on from their introduction, drawdown products have become the majority preference once again.
“Some of the new flexibilities embedded into the modern market such as fixed early repayment charges are equally designed for the long-term and set up so that customers can benefit from years to come,” he said, commenting further on the quarterly market report.
“Adviser feedback suggests customers are continuing to find a variety of uses for their property wealth, with gifting and funding home improvements both key motives behind activity in Q2 along with boosting everyday income and closing pension shortfalls.
“However, refinancing an existing mortgage, including interest-only loans, continues to rank as the biggest driver of current market activity. The innovative design of modern lifetime mortgages means anyone taking this route will have lots of ways to smooth the transition, not least the freedom to make repayments when they can afford to without the risk of repossession looming over them.”
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