Figures show quarterly increases in both new customers and total lending
The equity release market returned to growth for the first time in 12 months, figures from the latest quarterly market statistics from the Equity Release Council (ERC) have shown.
Total lending, which grew by 8%, reached £716 million in the third quarter of the year. This amount was loaned to 7,379 new customers – which increased by 10% – and 8,466 returning drawdown customers.
A total of 17,078 new and returning customers used equity release products – primarily lifetime mortgages – between July and September 2023 to unlock wealth from their homes. This number of active customers was slightly higher than the 17,028 recorded in Q2, although it remained down 33% year-on-year from 25,519 in Q3 2022.
“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,” David Burrowes (pictured), chair of the Equity Release Council, commented on the latest ERC equity release market statistics.
“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.”
Stephen Lowe, group communications director at retirement specialist Just Group, said that while overall business levels were still sharply down on a year ago, there were optimistic signs that a floor had 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,” Lowe added. “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.
“Higher interest rates are naturally making people cautious, but the fundamental drivers of growth remain as strong as ever. The range of options available makes it a difficult market for people to navigate alone. We urge people to seek out high-quality professional advice to ensure they consider all the alternatives available to them and choose the best solution to their individual needs.”
Simon Gray, managing director at equity release advisory firm HUB Financial Solutions, said it was good to see the market stabilising and some modest growth after such a tumultuous period.
He agreed that the flexible options built into many of today’s plans were putting customers in control, and that there was a huge amount of choice enabling advisers to tailor plans to customer needs.
“High-quality professional advice remains essential for customers to find the most suitable deals that give them the right combination of certainty and flexibility, whatever their financial objectives,” he said.
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