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Equity release growth halted in 2019

The equity release market’s rapid growth came to a halt in 2019, with the total staying flat compared to 2018.

There was £3.92bn of housing equity withdrawn, down slightly from £3.94bn in 2018, figures from trade body the Equity Release Council show.

However, the market has still grown four-fold in the last decade, with the amount withdrawn rising from £945.97m in 2009.

David Burrowes, chairman of the Equity Release Council, said: “After a period of steady growth, the market has reached a point of consolidation in 2019 with lending volumes in line with 2018.

“The sector enters 2020 in a strong position with updated standards and a greater number of diverse members signed up than ever before.”

Despite the slowdown the final quarter of 2019 was one of the busiest quarters on record, with more than £1bn released.

Alice Watson, head of marketing, insurance, Canada Life, expects the equity release market to continue growing.

She said: “2019 was a difficult year for most parts of the UK economy and that’s reflected in today’s ERC stats.

“But the start of a new decade could herald further expansion for the equity release market, if it builds on the successful foundations of the previous decade: strong customer safeguards, adviser support and a relentless focus on giving customers the flexibility and certainty they want.

“There is still much work to be done – customer misconceptions and negative perceptions of equity release continue to hold back the industry. The industry must work together to overcome these obstacles to growth.

“The strong finish to 2019 is a positive sign for the industry and coincided with a time when wider economic trends indicated a more positive picture for the UK economy. Should these trends persist, and the industry continue to offer innovative products, the market is all but certain to return to expansion in 2020 and beyond.”


Source: Property Wire

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Strong growth in lending by equity release firms and other specialist lenders

There was strong growth in lending by equity release firms and other specialist mortgage lenders last year, as the demand for later life borrowing increases, according to trade association UK Finance.

In a blog on its website, it said gross mortgage lending totalled £268 billion last year, up 3% on 2017.

Patterns of borrower incomes have become more complicated, it said, partly driven by a growth in people being self-employed as well as an ageing population with more people working for longer.

The blog said: “In this changing environment, lenders who have more bespoke, often manual, underwriting processes are well placed to help these customers.”

UK Finance’s figures show lending by equity release specialists increased by £800 million between 2017 and 2018.

And its figures relating to older borrowers show 78,514 new residential loans were made to borrowers aged over 55 last year, with 42,866 new equity release loans made to this age group.

Equity release covers a range of products which allow people to access the equity – or money – tied up in their home.

But while an immediate cash boost could be useful in some situations, there are important longer-term factors to consider.

For example, borrowers may find they might not be able to rely on their property for money needed in retirement, or that they will have less than they wanted to pass on as an inheritance. Borrowers may want to take independent financial advice when weighing up their options.

UK Finance said that, in a sign of growing competition for borrowers’ business generally, 70 lenders each provided more than £50 million of mortgage lending to home owners and landlords in 2018, up from 65 lenders the year before.

Lloyds Banking Group remained the UK’s biggest mortgage lender last year, followed by Nationwide Building Society in second place.

The blog, written by UK Finance analyst Callum Bilbe said: “Lenders have seen a higher demand for mortgages from older borrowers in the last few years, extending their maximum age criteria and adapting underwriting for those whose income in later life is more complex.

“This has facilitated a competitive and expanding mainstream later life lending market.

“This is also evident within the equity release mortgage market, where we continue to see strong growth. This is driven in part by investment from firms in the life and pensions space, for whom the long-term income stream from equity release mortgages aligns well with their liabilities.”

By Vicky Shaw

Source: Yahoo Finance UK