The Equity Release Council has released its 2021 Autumn Market Report. This iteration has found that mortgage repayments have soared by 20% to reach a record of £38bn in H1 2021. Meanwhile, the choice is lifetime mortgages has also been found to double in the last two years which, combined with low rates and flexible features, increases the appeal of using equity release to help meet later life financial needs.
Amongst its findings were that:
- UK mortgage capital repayments have increased by 20% year-on-year, bringing the total amount of debt repaid in the first half of 2021 to an unprecedented £38bn – equivalent to £200m a day or £3,500 for every mortgaged household.
- The trend has been fuelled by regular repayments and overpayments reaching record hights, new borrowing ahead of the Stamp Duty deadline and fewer mortgage payment holidays.
- Nation is now carrying over £1.5trn of mortgage debt for the first time on record, but factors including house price rises mean for every £1 of mortgage debt, there is more than £3 of equity in our homes.
- The overall value of UK housing stock has risen from £5.67trn to £6.42trn over the last year, with private property wealth reaching a new high of £4.87trn.
- Lifetime mortgage product options have doubled in the last two years which, combined with low rates and flexible features, increases the appeal of using equity release to help meet later life financial needs.
David Burrowes, chairman of the Equity Release Council, said: “UK households are converting unprecedented amounts of mortgage borrowing into property wealth as we look to move on from the worst of the pandemic. Combined with property price rises fuelled by the Stamp Duty holiday, homeowners have record equity to potentially draw upon in later life. The transformation of later life mortgages in recent years has given people more opportunities to access their biggest source of wealth. We are seeing mindsets change to the point that tapping into property wealth is now a common consideration to meet various retirement needs, from topping up pension income to providing a ‘living inheritance’ via gifting to younger generations.”
He added: “The modern equity release market has shown resilience in the face of uncertainty to climb back towards pre-pandemic levels. The disruption of the last 18 months has not slowed the pace of innovation in lifetime lending, and it is important the market continues to evolve to address the financial challenges people will face in the post-pandemic world.”
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