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Record numbers releasing equity from their homes

Written by: Emma Lunn
The equity release market is on course for a record year after customers took out £1.049bn in property wealth in the three months to the end of September.

Figures from equity release adviser Key show that the total value of equity released rose by 18.8% from nearly £884m in the third quarter of 2020. However, the number of equity release plans taken out decreased by 3.2% year-on-year to 10,333 (10,671 in Q3 2020) and remained below pre-pandemic levels (11,772 in Q3 2019).

Big ticket items such as debt management and gifting were behind nearly two-thirds of the equity released in Q3 2021.

The total equity released in the first nine months of 2021 stands at £2.989bn, just short of the £3.4bn released in both 2020 and 2019, putting the market on course for a record £4bn this year.

About 75% of customers took out drawdown plans in the three months to September, with the average initial advance standing at £57,183 with customers still having the ability to draw a further £301.5m.

According to Key, the average equity release customer is 70-years-old, which is an increase from 2020. Almost half (49%) of those who take out equity release are between the ages of 65 and 74-years-old.

Customers on average released £101,593 in the three months to September, about 23% higher than the £82,827 in Q3 2020. Key says this highlights the continued focus on ‘big ticket’ items such as gifting and debt management.

Nearly three quarters (73%) of the money released was used for debt management and to helping family and friends in the three months to end of September. Around £588m of the money released in the quarter was used to clear debts while more than two-fifths (42%) of the cash given to family and friends was used for house deposits, while 36% was given as an early inheritance.

Will Hale, CEO at Key, said: “Against the backdrop of a pandemic, the equity release market is on track to break the £4bn barrier and potentially even touch £4.5bn by the end of the year. This performance demonstrates how modern equity release products are now embedded within the mainstream financial services market, offering low rates and flexible features to address a wide range of different customer needs and wants

“This year we’ve seen increasing numbers of people using equity release to support families, manage their current borrowing and use the historically low rates to remortgage their existing equity release plans. Whilst many plans have been put on hold during the pandemic, we also expect to see the return of people looking to boost discretionary spending as they look again at how to fund their later life ambitions.”

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