Equity release clients borrowed a total of £4.8bn last year – a 24% rise on 2020’s figure, says the Equity Release Council (ERC).
This included £4.3bn from 40,964 new plans and £500m from repeat clients.
The ERC adds that last year saw 76,154 clients either enter the market, use a drawdown facility, or extend an existing plan – a 4% increase on 2020.
Total lending for 2021 was higher than the record set in 2018, £3.9bn, and this is down to, the ERC says, there being a more competitive equity release market and UK house prices going up by an average of £25,000 in the 12 months to November 2012.
In terms of the final quarter of 2021, equity release performance consisted of 19,975 new and returning customers releasing £1.34bn – the busiest quarter on record.
For new borrowers, new lump sum plan sizes grew 20% on a yearly basis in Q4 to £125,911 and total borrowing for new drawdown plans went up by 18% – £96,699 taken straight away and £35,532 held back, on average.
ERC chairman David Burrowes says: “Cost of living pressures are just one of many reasons why homeowners are choosing to cash in on years of wealth accumulated in their homes. Increasing loan sizes partly reflect the rise in house prices and a more affluent type of customer using lifetime mortgages to plan their finances or gift a living legacy to family members.
“Having proved itself to have solid foundations through a period of uncertainty, the equity release market’s return to growth has just as much to do with trust and innovation as it does with external factors as households look to manage their finances in later life.”
Canada Life head of marketing for insurance Alice Watson comments: “This is really a fantastic result for the industry. I’m thrilled to see the market return to growth so quickly after the world was turned upside down during the pandemic.
“Today’s report shows that equity release has not only proven its resilience but also its relevance in modern retirement journeys as people seek to support their lifestyles or help out family members financially.”
Equity Release Supermarket found that its own customers borrowed an average of £113,000 in 2021, up from £91,000 in 2020.
Founder and chief executive Mark Gregory says: “This rise is ultimately driven by the high-net-worth market, particularly in London and the South East. This part of the UK is now seeing lifetime mortgages as an alternative and highly attractive vehicle for their shorter term borrowing needs in order to leverage high value properties.
“This in turn is driven by a very low interest environment and the availability of fixed term ERCs across the marketplace.
“For instance, in London, our average case size was up 25% year-on-year and we saw similar increases in the South East – where our average case size increased by 19% year-on-year.”