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HomeMortgageTotal equity release lending falls to £2.3bn in 2024 but year-end performance...

Total equity release lending falls to £2.3bn in 2024 but year-end performance shows green shoots – ERC



Total equity release lending stood at £2.3bn in 2024, a fall from £2.6bn in 2023, but the last quarter of the year shows signs of “recovery”.

According to the latest figures from the Equity Release Council (ERC), in Q4 2024, total lending came to £622m, a rise of 16% compared to the same period the year before.

The report found that there were around 15,073 plans in Q4, a jump of 10% year-on-year, with around 5,361 being new plans, which is stable year-on-year.

Returning drawdowns in the period came to 6,301, up 13% annually, and further advances stood at 1,411. The latter is 35% up on Q4 2023.

The ERC said average loan sizes for drawdown and lump sum lifetime mortgages had risen, which was helped by UK house prices climbing 3.3% annually.

Over half – 56% – of new plans were for drawdown as opposed to lump sum, which the ERC said showed that “customers are clearly holding out for the potential to make future drawdowns at lower rates if pricing continues to fall”.


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Average loan sizes Quarterly change Annual change
New lump sum £115,243 +3% +14%
Lump sum further advance £31,699 +11% +13%
New initial drawdown £70,926 +1% +14%
New drawdown reserve facility £56,565 +14% +38%
Returning drawdown £11,426 -3% -14%
DD initial further advance £25,700 0% +6%
DD further advance reserve facility £6,881 -31% -29%
Product choice among new customers Drawdown: 56% Lump sum: 44%

(Source: The ERC)

 

Equity release market has ‘turned a corner’

David Burrowes (pictured), chair of the ERC, said the quarterly data shows “encouraging signs of recovery in the equity release market”, adding that it was the third consecutive quarter of growth in lending and total plans for the first time in two years.

“This is a testament to the resilience of the market and its ability to adapt to shifting economic conditions. It’s particularly notable to see a steady increase in returning customers using further advances, with a 27% rise this quarter, reflecting the confidence that homeowners have in leveraging their property wealth responsibly.

“This is further supported by the gradual rise in UK house prices, which has given many customers the opportunity to access sufficient equity to meet their financial needs,” he noted.

Burrowes said that, as consumer demand “stabilises”, the industry will “continue to support older homeowners’ needs through product innovation and flexibility”.

“The average loan sizes of initial drawdowns have grown by 8%, with customers making use of reserve facilities to manage borrowing efficiently over time. This demonstrates the versatility of equity release in addressing diverse financial goals, from home improvements to supplementing retirement income,” he added.

Burrowes said the final figures of 2024 showed the market had “turned a corner and there is cause for optimism”, pointing to settling interest rates.

He noted that if the growth trajectory continues, then this year will “see more customers considering the option to access their housing equity using an increasingly diverse range of innovative products”.

Paul Carter, Pure Retirement’s CEO, said the latest figures from the ERC “demonstrate the underlying strength and opportunity within the later life lending sector”, both in commercial terms but also helping over-55s achieve their financial goals.

“Seeing widespread quarterly and annual increases in lending value and volume offers renewed hope for the year ahead and offers a clear sign of building momentum in what has historically been a subdued period of the year.

“The favouring of drawdown plans points to the continued need for innovative and flexible product solutions, and we look forward [to] supporting the council, our advisers, and our customers going forward in delivering best outcomes,” he noted.

 

Digital innovation is crucial

Mark Gregory, founder and CEO of Equity Release Group, explained that a combination of macroeconomic factors and “additional challenges due to consumer apprehensions” had led to a change in consumer behaviour in the past year.

“Whilst the desire and intention were there, pressures and concerns due to the cost-of-living crisis, for example, were prolonging people making important financial decisions, or they required financial guidance and advice but were constrained by a lack of general awareness or visibility. For instance, there’s little or no media advertising at the moment; therefore, awareness of financial options is low,” he explained.

Gregory said “optimism” did return in the second half of the year, with the firm seeing a rise in demand in Q4 2024.

“We’ve seen a sharp rise in lead figures, which rose by over 30% in comparison to 2023, as well as an increase in applications, which grew by 16% YoY. Also, smartER, which affords people the freedom to research equity release plans in their own time, without feeling any pressures, saw a 3.5% elevation in sales in comparison to 2023 YoY versus other channels,” he said.

Gregory said “digital developments” create new opportunities, but there’s “still a long way to go in terms of product development to ensure we [meet] demands in this higher rate environment”.

“The market for later life planning is diverse, with consumers now having to prioritise immediate expenses as opposed to longer-term goals, therefore usage is shifting. However, with accessible, clear and comprehensive information available early on, consumers can feel in control of their situation before gaining the financial advice they need. Accurate, online tools are a necessity within the sector, and when product development aligns with this, I believe there will be even more appetite and heightened growth,” he concluded.





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