The equity release market grew on a quarterly basis for the first time in 12 months, according to new figures.
The Equity Release Council (ERC) analysis showed new customer numbers rose 10% to 7,379 in Q3 (July to September), while total lending increased 8% to £716m.
However, the market is still markedly behind 2017 levels, with new customer figures down 45% and total lending down 58% on annual basis.
The average initial drawdown for the quarter was £63,238, while the average lump was £94,806, with both figures down about a third on an annual basis
A total of 17,078 new and returning customers used equity release products – primarily lifetime mortgages – between July and September 2023, while the number of active customers was very slightly up from 17,028 in Q2, although it remained down 33% year-on-year from 25,519 in Q3 2022.
ERC chair David Burrowes says: “These figures suggest the process of building back is slowly underway in the equity release market, after a period where higher interest rates have prompted consumers and industry to reach for the ‘reset’ button.
“With customers starting to venture back, the market is at the start of a gradual but fragile road to recovery, with pent-up demand likely to emerge in future years as the interest rate cycle begins to turn again.
“While the clock has been wound back on lending activity and loan sizes, product innovation has increased the flexibility of lifetime mortgages.
“New customers of plans that meet our high consumer standards can use voluntary repayments to keep their costs in check while existing customers are free to take extra instalments of money as they need it, safe in the knowledge their previous borrowing is fully insulated from rate rises.
“Looking ahead, we must be wholly committed as an industry to putting equity release in its proper context as one of a range of later life lending options and putting property wealth in its proper context at the heart of every retirement planning conversation.”
Just Group group communications director Stephen Lowe adds: “Overall business levels are still sharply down on a year ago but there are optimistic signs that a floor has been reached on which to build.
“Both new customer numbers and total lending in Q3 were the highest we’ve seen in 2023 and we would expect further improvement going forward. After the shock caused by the rapid rise in interest rates over the last two years, it is positive to see the Council highlight a recent reduction in the average lifetime mortgage interest rates.”
