Drawdown lending hit £271 million in the last quarter of 2015, pushing the total equity release to a record high for the year, according to the Equity Release Council.
Nigel Waterson, Chairman of the Equity Release Council has also called for equity release planning to be part of “every homeowner’s checklist” when it comes to estate planning.
Homeowners over the age of 55 pushed the total lent through equity release to £1.61 million with drawdown making up £961 million of that, the highest since this type of mortgage emerged in 2004.
The total of £1.61 billion was 16% higher than 2014’s total of 1.38 billion. According to the Equity Release Council, annual equity release has more than doubled in the past four years and now sits a third higher than its pre-recession peak.
Nigel Waterson, Chairman of the Equity Release Council, said: “These year-end figures are the latest sign of growing reliance on housing wealth as a key pillar of later-life financial planning.
“The rising popularity of drawdown has been one of the success stories of the last decade, and product features have since appeared allowing customers to protect a percentage of their equity as an inheritance, make part-repayments of capital or make interest repayments on their loan.
“Looking ahead, the challenge is to continue developing products which meet consumer needs while ensuring that innovation is combined with protection and long-term sustainability.
“The work led by The Council and its members to uphold standards for equity release products and advice has been fundamental to creating a safe market for consumers, and we will continue these efforts to meet growing customer demand alongside regulators and the Government. The Council enters its 25th year with huge confidence in the future of equity release.
“Housing wealth is often people’s greatest asset and it makes sense for equity release to be on every homeowner’s checklist to consider as part of their retirement and estate planning.
“At the same time, it is not suitable for every circumstance, which is why professional financial advice and independent legal advice are essential so that customers understand how the products work, and what they can offer. Supporting advisers as the market grows will be a top priority in the year ahead.”
