Equity release continues to be a significant option for homeowners looking to unlock the value in their properties, with recent trends showing key shifts in market activity and product preferences.
According to the Equity Release Council¹, total annual equity release lending reached £2.6bn in 2023, compared to a record-breaking £6.2bn in 2022, returning the equity release market to the level of activity last seen between 2016 and 2017 (£2.1bn to £3.1bn).
The total number of plans agreed last year was 26,119, a drop of 47% from 49,285 in 2022. The majority preference (53%) opted for equity release drawdown lifetime mortgages, reversing the trend in 2022 when lump sum lifetime mortgages made up 52% of new equity release product sales.
Average property gain of over £100k
An overwhelming majority of households (93%) sold their homes for more than their initial purchase price, according to recent research². People who bought properties within the last two decades saw an average increase of £102,650 when selling up in 2023, marking the second-highest recorded figure. Many of these homeowners may have considered equity release as an alternative to outright selling, particularly given the significant property gains.
In total, sellers in 2023 collectively gained £103bn in value compared to their purchase prices, including those who accessed funds via equity release. However, the average gross profit dropped by £10,300 or 9% compared to 2022, partly due to marginal house price decreases.
According to estate agents Hamptons, the decrease in average gains is partly due to small house-price falls last year, alongside households opting to move sooner. Aneisha Beveridge, Head of Research at Hamptons, said: “Households rarely move when they’re faced with the prospect of selling their home for less than they paid. Generally, the chances of selling at a loss peak within the first few years of ownership. For some Londoners, that stretches back to when parts of the market peaked in 2016.” This trend could also impact the decision to explore equity release options as a way to access home equity without selling.
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¹ERC, 2024
²Hamptons, 2024
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
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The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.
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