Thursday, July 7, 2022

Older homeowners released £111,500 in property wealth in Q1

Older homeowners

The average amount released climbed 7.5% from £103,710 taken out last year and existing equity release customers benefited too

Older homeowners released an average of £111,500 in property wealth in the first three months of the year, according to data from the Key Later Life Finance.

The data showed that plan sales surged by 21.4% in Q1 2022 to 12,551 compared with last year while the value of new equity released soared by 30.5% to £1.399bn, representing the highest on record for the industry.

The average amount released climbed 7.5% from £103,710 taken out last year and existing equity release customers benefited too.

Existing equity release customers were able to release another £37m in further advances or drawdown.

Low rates and increasing flexibility of equity release plans are driving an increase in remortgaging, with Key estimating 1,789 remortgaging cases were completed in Q1, equating to a 78% increase on last year’s 1,005.

Meanwhile, customers moved an average of £121,073 from an interest rate of 5% to 4.1% during the period. The surge in business meant it accounted for 25% of all equity released for debt management, the data found.

In Q1 2022, customers could choose from 1,557 plans compared with 518 in the same period last year.

During the first quarter, 42% of customers using equity release to repay their mortgages hit an all-time high and reached more than double compared to 10 years ago.

While the financial resilience built up by some during the pandemic has provided some people with a cushion, Key’s data suggests that there has been a slight increase in those repaying unsecured debt from 27% (FY 2021) to 29% (Q1 2022).

The number of customers using property wealth to help families fell from 21% last year when the Stamp Duty holiday was still in place to 15% in this quarter, but they still accounted for 19% of all equity released.

The number using equity release to fund holidays rose to 11% from just 1% last year when Covid restrictions were still in place. The proportion of equity used to pay for holidays only rose to 2% from 1%, however.

Elsewhere, 45% of younger equity release customers aged between 55 and 64 used the money to pay off mortgages but their mortgage debt is lower at £63,627 compared with £114,922 for those aged between 65 and 74.

Customers aged 75-plus are on average paying off mortgages of £97,681, the data shows.

Key chief executive officer Will Hale says: With headlines suggesting that the UK is facing a challenging inflationary environment, we are seeing older customers increasingly choosing to manage their debt using equity release. Although being able to clear any borrowing before retirement is obviously ideal, with modern equity release products now offering all new customers the opportunity to make penalty-free capital repayments over-55s have more options than ever before.


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