Latest figures show equity release has a broadening appeal


We’ve been predicting it for some time, but the Equity Release Council’s announcement last month made it official: Q3 was the equity release industry’s first billion-pound quarter.


When you think that the sector only had its first £500 million+ quarter two years ago – and that the industry lent more last quarter than it did in the whole of 2012 – it becomes clear just how staggering this progress is.


The remarkable effort the sector has put in to win consumer confidence and trust over the last decade has played a huge part in this growth. And so too has the work put into innovating and expanding the range of products available to customers, as highlighted by the Equity Release Council’s Autumn Report.


Our latest reasons for loans figures highlight a third element driving growth: the change in how consumers are viewing and using equity release.


No longer is equity release seen as a last resort option. Consumers are becoming more familiar with the product and its protections, and it has expanded their horizons of what they will consider it for. In Q3, we’ve seen a pronounced shift towards equity release loans being used for more major lifestyle purchases. Consumers are increasingly tapping into their property wealth to allow them to buy new property (up from 10% to 11%), make purchases such as a car, caravan, motorbike or boat (15% to 16%), and – in the biggest change of the quarter – fund home or garden improvements (up from 45% to 50%).


We also know what kinds of home improvements people are using equity release for. Just over a third (38%) of loans are used to fund the kinds of renovations that improve a home’s value or help owners enjoy them more, such as conservatory extensions. But interestingly, around one in eight (12%) loans are used to adapt their home for comfort and safety – for example, to cover the costs of installing stairlifts or chair ramps. We’re no stranger to customers using equity release to cover care costs, but increasingly more are using it to ensure they can get the care they want at home.


This isn’t to say that we’ve seen a collapse in the number of people using equity release to clear mortgages, consolidate debts or fund daily living expenses – options that have long been popular. But it shows that people are looking at property wealth holistically, and increasingly viewing it as something that can help them enjoy their retirement just as much as it can help them settle their finances.

 

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