This kind of lending is now up 21% compared with last year and new equity release plans have reached over 5,000 for the first time since 2009, the data from the Equity Release Council also shows.
This year is the 25th anniversary of the first industry standards being developed for equity release and now drawdown popularity is continuing to increase its market share.
With new loans rising, they have now reached the highest amount ever recorded as home owners make use of their housing wealth to supplement their monthly income, make home improvements, support younger family members with buying a property or pay for the trip of a lifetime.
The data also shows that the market share of drawdown lifetime mortgages products has increased slightly year on year and it remains the most popular product. The value of drawdown products accounted for 60% of all loans, while the volume of loans was 67%, up 1% and 2% respectively from the first quarter of 2015.
There were 3,450 drawdown loans agreed in the first three months of 2016, up 9% on the same period in 2015. Their value was £234.5 million, up by 22% in the same period.
The value of lump sum mortgages accounted for 40% of total lending in the first quarter and 33% of the total volume of loans. The value of lump sum mortgages was £158.8 million, up 19% from the first quarter of 2015 and the value of home reversion plans sold remains less than 1% of the market.
‘These latest figures represent a strong start to the year for the equity release market, and place housing wealth centre stage in financial planning for later life. In a year that marks the milestone of 25 years of safe equity release, the market is continuing to build on the momentum of recent years,’ said Nigel Waterson, chairman of the Equity Release Council.
‘The recent decision from the Financial Conduct Authority to reduce affordability assessments for Lifetime Mortgages is a positive development that will help more people benefit from all that equity release has to offer. For a generation that are often asset rich and cash poor, their home is likely to be their greatest asset and should form part of everyone's planning for retirement,’ he pointed out.
‘As we look forward to the next 25 years, it is important now to maintain expert adviser support for customers as the sector grows, as well as continuing to innovate to satisfy customer demand, all the while preserving standards and consumer protections,’ he added.
According to Alice Watson, product and communications manager at Retirement Advantage Equity Release, the figures highlight more clearly than ever how equity release is now an integral part of financial planning for retirees across the UK.
'The sector is maturing apace, spurred by new entrants to the market and product innovations which are great news for equity release customers. People are now taking a holistic approach to their assets in retirement, often looking to their properties first as a source of income for their later years,' she pointed out.
'However, we still have plenty of work to do to ensure that people approaching retirement are aware of all the options available to them. Our latest research shows that, despite lending hitting record highs, the UK equity release market has expanded to less than one percent of its potential size,' she explained.
'Over the coming years, we expect to see this potential rapidly fulfilled. The FCA’s recent amendments to equity release affordability assessments is a welcome step in this regard, helping to ensure that providers can meet growing customer demand for their products,' she added.
