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2021 was a record year for residential real estate in the UK, with the average property price on these shores increasing by a whopping £16k over the course of the previous 12 months.
While this is a huge challenge for those looking to take their first steps on the property market, it’s great news for those who already own their homes.
Certainly, there’s an opportunity for homeowners in some instances to release equity in their home as a way of creating a considerable lump sum for their futures or fund an early inheritance on behalf of their beneficiaries. But what does the average equity release client look like on these shores?
The Average Equity Release Client Portfolio
Key has released some in-depth data on its equity release mortgage customers, providing a clear breakdown of who used their services through Q3 2021.
This revealed that 58% of those who took out an equity release during the reporting period were married or in a long-term relationship, while 27% were single women and 15% were single men.
This figure of 58% has risen incrementally since H1 2021 (57%), although this remains one of the lowest proportions of married couples taking out plans since records began. This may represent a social change, with a diverse range of lifestyle choices now enacted across the length-and-breadth of the UK.
Interestingly, the average customer who took out equity release was 70 years old, which is marginally higher than the same time last year (69).
Close to three-quarters are over-65, while just 9% are younger than 60 years old. However, we have seen a 5% year-on-year uptick in the number of younger homeowners who take out equity releases. This represents a trend that has characterised similar periods of economic tumult, such as the 2008 financial recession.
Overall, 49% of equity release clients are aged between 65 and 74, and this trend remains largely unchanged as people leverage this vehicle to help fund their retirements.
What Products are the Most Popular?
Perhaps unsurprisingly, ‘drawdown’ remains the single most popular equity release product in the UK, as people look to create flexible funding plans in an increasingly uncertain economic climate.
In terms of geography, Northern Ireland has seen the biggest annual movement regarding the number of cases (+105%) and total value released (+267%). Wales saw the next largest increase in terms of the number of customers (+27.3%) and the value of equity released (+74.7%), while England trailed behind in third place.
However, Scotland bucked this overwhelmingly positive trend by recording a -4.6% fall in the total equity released, alongside a striking -24.9% decline in customer numbers.
These trends definitely make for interesting reading. However, the overall takeaway is that equity release on these shores remains increasingly popular and a viable source of income in a strained economy.
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