Homeowners release £1bn of equity in Q1: Key

Essex Home Finance
Home owners cashed in on rising house prices by releasing £1bn in equity during the first three months of this year.
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Home owners cashed in on rising house prices by releasing £1bn in equity during the first three months of this year, up by 13% from £950m in the same period of 2020, according to the latest market monitor from Key.

Despite the increase in the value of equity released, the number of plans sold was down by 9.5% year on year from 11,423 to 10,341, as a smaller number of borrowers took out larger sums.

There was a significant increase in the average amount released, which was up by 25% from £83,242 to £103,710.

The average price of a house used for equity release also rose by 12% from £326,486 to £366,660, which is substantially higher than the national average house price of £232,134 in March.

The amount of reserved drawdown and further advances taken dropped by 6% from £146.3m last year to £137.86m. 

Around a third of home owners used the money for clearing mortgages, while 26% paid down unsecured debts and 21% gave money to family.  

This compares to 23% clearing mortgages, 25% clearing unsecured debts and 29% giving money to family in Q1 2020.

Key chief executive Will Hale says: “The strength of the property market driven by the extension of the stamp duty holiday and the launch of government guarantees for over 95% LTV mortgages is helping to increase the property wealth that over-55s can use for retirement planning.  

“However, the equity release market is building its own momentum and demonstrating continued resilience as clients look to it for support with debt management and gifting.

“The average amount released at more than £103,710 demonstrates how important property wealth is in meeting customers’ wants and needs while the rise in the average value of homes owned by customers’ shows how wealthier customers are looking to use their homes.  

“Lower interest rates and greater flexibility driven by lenders focus on product development is adding to the momentum as the sector continues the journey to become a true later life lending market built on the foundations of specialist advice.”

Original Article from Mortgage Strategy 17/05/2021

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