The total amount of property wealth withdrawn by customers reached £1.6bn in the second quarter of this year, according to the latest data from the Equity Release Council (ERC).
The latest figure surpasses the previous high of £1.53bn from Q1 and results in a total of £3.13bn for the first half of this year.
A total of 23,910 new and returning customers withdrew wealth from their properties between April and June 2022, which equated to a 2% increase from 23,395 in Q1 2022 and a 17% rise from 20,352 in Q2 2021.
ERC says the increase in lending activity has been driven by more customers in the market and a shift in product preferences towards taking lump sums rather than setting up drawdown arrangements.
The number of new plans agreed in Q2 increased 26% year-on-year when compared with the subdued market of Q2 2021 when pandemic restrictions remained in place but fell short of the peak of 12,891 recorded in Q4 2018.
The number of returning drawdown customers dipped slightly in the second quarter, with 9,305 making withdrawals from their existing plans compared with 9,450 in Q1 2022 and 9,382 in Q2 2021.
However, ERC notes that it was the first time more than 9,000 returning drawdown customers have been seen for two successive quarters since the Covid-19 pandemic took hold in Q2 2020.
Data also found that more new customers opted for lump sum lifetime mortgages over drawdown lifetime mortgages for the first time in 13 years, since Q1 2009, increasing from 45% of new plans in Q2 2021 to 54% now.
The launch of the Council’s fifth product standard on 28 March means all new plans in Q2 came with the option for customers to make penalty-free partial repayments when they can afford to.
The ERC says this would allow them to reduce their future interest costs with no requirement to make ongoing repayments.
ERC chair David Burrowes says: “The need to improve older people’s access to housing wealth was widely recognised by industry and policymakers long before the Covid-19 pandemic and current cost-of-living pressures emerged.”
“The fact that hundreds of homeowners are now choosing to release equity each day, based on detailed financial and legal advice, is significant progress from the days when the market was considered an under-developed niche rather than the mainstream option it has become.”
Air chief executive Stuart Wilson says the latest figures “make interesting reading as they clearly highlight the vital role that housing equity is playing for hundreds of over-55s across the UK”.
“The introduction of the fifth equity release standard which guarantees new customers the opportunity to make ad hoc capital repayments within lenders criteria was a great step forward but there is more to do,” Wilson adds.
Also commenting, more2life chief executive Dave Harris says: “What a difference two years can make! In Q2 2020, The Equity Release Council figures suggested that lending to new and existing customers was nudging £700m and today, we are pleased to see that it has more than doubled in Q2 2022 to £1.6bn.”
“While there is no doubt this is driven by increasing numbers of customers who are taking the proactive choice to include their largest single asset in their later life planning, advisers and the wider later life lending community has certainly played a role. Speaking to networks, platforms and IFA firms, there is real interest in the role that property can play in helping people to enjoy a better standard of living in retirement.
“There is much for the industry still to do and we need to continue to focus on how we can best meet customers needs but the Q2 figures suggest that we are on the right track,” he adds.