The Equity Release Council (“ERC”) has announced that the value of funds raised during 2013 by homeowners aged 55+ totalled £1.07bn, an increase of 16% over the amount released in the previous year.
The ERC, the body (incorporating SHIP) which safeguards the interests of consumers considering Equity Release Plans, also announced that the market for Lifetime Mortgages and Home Reversion Plans has risen by 36% since 2011, and the equity release sector is now stronger than it was in the aftermath of the financial crash five years ago.
Many people at or approaching retirement have been particularly attracted by Lifetime Mortgages which provide an initial cash lump sum combined with a drawdown facility enabling money to be withdrawn as and when needed in the future. These flexible drawdown plans accounted for two thirds of business volumes during 2013.
Reflecting higher house prices in most regions and an increasing confidence about Equity Release Plans amongst consumers, the average sum released rose to over £60,000 in the fourth quarter of last year.
The top three reasons for taking out an Equity Release Plan in 2013 were:
- To supplement pension income
- To make home improvements
- To redeem an existing mortgage
The Equity Release sector has also become a popular source of Interest Only Mortgage for those in retirement, and it is clear that ageing homeowners, previously concerned about the impact of compound interest, are now attracted by the Equity Release sector’s Lifetime Interest Only Mortgage product range.
Each Equity Release Plan has its own unique product features and it is encouraging that the statistics from the ERC reveal that independent financial advice is sought by the vast majority of consumers. Independent Equity Release specialists like Bower assure that the most suitable plan is selected from the many Lifetime Mortgages, Lifetime Interest Only Mortgages and Home Reversion plans which are available.
