Retired home owners released £3.6 billion in new property wealth in the UK last year as the market doubled in size in just three years, new data shows.
More home owners seeking advice about property wealth and what they can do to access it means that membership of the Equity Release Council has passed 300 for the first time.
UK Asset Resolution (UKAR), the holding company for Bradford & Bingley and Northern Rock, has sold a portfolio of equity release loans to Rothesay Life for £860m.
Lifetime mortgages could get scarcer and more expensive as the Bank of England fears lenders are under-pricing the risk of a fall in house prices.
With the value of cash being released from homes passing £3bn a year for the first time, equity release has cemented its place in the mainstream of financial planning.
A negative equity time-bomb is growing under Britain's banks and insurers as baby boomers are unlocking unprecedented sums of cash from their homes in equity release schemes at ever-younger ages.
Equity release is booming, with older people withdrawing almost £8m a day from their homes, it emerged this week. And there are more schemes than ever available to over-55s looking to unlock the value tied up in their property so they can, for example, pay off their interest-only mortgage.
More people are taking out so-called drawdown pensions without taking advice, the City regulator has warned.
Some £8.2 million of housing wealth was withdrawn in the UK every working day in the second quarter of 2016 as equity release lending passed £0.5 billion for the first quarter on record.
Overall there was £514.4 million of lending in quarter two, up 34% year on year and 58% higher than in the second quarter of 2014, according to the latest figures from the Equity Release Council.
The council report points out that the three busiest quarters for equity release lending have all come within the last 12 months and the annual rise in the number of new plans agreed is the fastest seen in 13 years.
The potential wealth available to over 55s in England, Scotland and Wales through equity release increased to £381 billion in the second quarter of 2016, a 0.7% quarterly increase, the latest research shows.
However, values failed to increase across Greater London for the first time in almost four years due to uncertainty surrounding the European Union referendum while equity release potential elsewhere in the country continues to grow apace, according to the Equity Release Property Value Tracker report from Retirement Advantage.
The report says that house prices are rising fastest in regions outside of Greater London, with the capital suffering its first quarterly drop in property values since the fourth quarter of 2012.
Downsizing your home to give yourself an income in retirement is unrealistic, according to the former pensions minister, Steve Webb.
As many as three million people who are planning to rely on their homes for a pension are in for a shock, he said.
In a report for the insurance company Royal London, he said most people doing so would experience a slump in living standards on retirement.
He said the idea amounted to a "downsizing delusion".
Looming interest only mortgage due dates have driven a surge in sales of lump sum equity release plans to 40% of the market in the UK in the first quarter of 2016, according to a market monitor report.
Some 40% of people are taking a single lump sum advance to reduce their debts, up from 30% for the same period in 2015, the data from the report from Key Retirement shows.
The firm believes that the surge is largely being driven by customers who need the maximum cash available rather than drawdown as they are using the lump sum to pay off shortfalls in interest only mortgages. Average amounts released through equity release are now £76,000 and as high as £134,000 in London.
Maturing interest-only mortgages are triggering a surge in the sales of equity release plans, figures reveal
Older homeowners unlocked a record amount of value from their properties in the first three months of 2016, cashing in to the tune of £393m.
The figures show housing wealth is “centre stage in financial planning for later life”, said the Equity Release Council, which reported the biggest quarter for lending in its 25-year history.
The numbers were boosted by rising house prices, which have made homeowners feel more secure about the value of their homes, said the council’s chairman, Nigel Waterson, as well as by an increasing choice of products.
Equity release lending in the UK reached a new high of £1.61 billion in the final quarter of 2015 as home owners over the age of 55 unlocked a record amount of housing wealth, new data shows.
Lending via drawdown products totalled £271 million between October and December 2015, the largest quarterly total since this type of lifetime mortgage first emerged in 2004, the data from the Equity Release Council sows.
Housing wealth in the UK should be used to better support an ageing population by making equity release more accessible and allowing it to develop further, it is claimed.
The Equity Release Council has released key recommendations in a White Paper calling on the Treasury to take a lead on coordinating relevant policy to benefit consumers.
Equity release lending in the UK has seen its biggest rise for 11 years with levels up by £68.3 million in the third quarter of 2015 compared with the previous quarter.
The Equity Release Council, which issued the figures, says that it is clear that more and more home owners over the age of 55 are making use of their housing wealth to support their finances in later life.
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