Sales of equity release plans slowed slightly in the second quarter amid ongoing economic uncertainty.
Figures from the Equity Release Council (ERC) reveal sales of new drawdown mortgages grew while take-up of new lump sum mortgages mirrored Q1 2018 volumes.
Overall, 7,227 new drawdown lifetime mortgages were taken out in Q2 by older homeowners seeking to release cash from their properties. This total was up 5% from Q1 2019 and 2% from Q2 2018. More than two thirds (67%) of new plans taken out between April and June were drawdown, the highest share seen since Q4 2017.
In comparison, 3,502 new lump sum lifetime mortgages were taken out, higher than any quarter prior to Q2 2018, despite being the lowest quarterly total seen over the last year.
The average size of new drawdown plans was consistent with the previous quarter in terms of customers’ first withdrawal (£63,166 versus £62,416 in Q1), although customers reserved more modest amounts of housing wealth for future use (£35,903 compared to £37,069 in Q1). The average size of a new lump sum plan taken out in Q2 was also scaled back slightly to £93,712, down 4% on Q1.
A total of £1.85bn of housing wealth was unlocked in the first half of 2019, versus £1.84bn a year earlier, with 21,585 new plans agreed versus 21,490 in H1 2018.
David Burrowes, chairman of the ERC, said the number of people drawing on housing wealth in later life remains high by historic standards and remains an important main stream funding option for many, despite short-term activity showing signs of the uncertainty that has impacted other areas of the economy.
Will Hale, chief executive at Key, said the figures underline the continued strength of the market.
He added that although sales of new plans have slowed slightly, “existing customers clearly remain confident in continuing to access their housing wealth to meet their needs and wants in later life”. Key expects the market to pick up as macro political and economic uncertainty eases.