The “pandemic property boom” in 2021 saw the total value of the UK housing market grow by over £1 million a minute, with the total value of property hitting £6.7 trillion by the end of the year – an increase of £569 billion.
While UK mortgage debt grew to record levels, homeowners gained £869 of equity for every £100 of new borrowing taken on, with the result that 77% of the average home was owned in cash (equity), equivalent to £207,470.
This data from the Equity Release Council’s Market Report, Spring 2022, represents 11% growth for the property market after mortgage debt is discounted. Mortgage debt reached a record £1.6 trillion, with £58.9 billion borrowed by homeowners last year.
Despite debt growing, homeowners gained £869 in equity for each £100 borrowed, taking the amount of equity in the average home during Q4 to 76.9% – a record high equivalent to £211,254 per household. This is thanks to the stunning growth in prices over the year. Many thought growth would stagnate with economic uncertainty and a rising cost of living. Yet, the monthly rise in March was the biggest seen since 2004, and prices are predicted to rise another 5.5% over the next three months.
The Council released a graphic that helps visualise how these figures impact the average homeowner:
David Burrowes, Chair of the Equity Release Council, said:
“With £1 million added to the value of UK housing every minute last year, there can be little doubt that the options afforded by property wealth will register in many people’s thoughts as they make financial plans for the future. The equity release market’s return to growth is part of a wider pick-up in later life lending activity, and the flexible features of modern lifetime mortgages give customers more ways to manage their finances and access life-changing sums of money at a lower cost.
While many aspects of today’s market have been transformed in the 30 years since consumer safeguards were first established, firm foundations remain in place so no equity release customer need ever worry about owing more than their home is worth and can rest easy in the knowledge they can remain in their home for life with no threat of repossession for not keeping up with repayments.
As we move into an environment of growing cost-of-living pressures, the importance of rigorous advice will be greater than ever so that decisions to release equity continue to provide long-term satisfaction as well as short-term relief.”
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