Figures for 2016 show equity release booming as homeowners draw down to meet financial needs, writes Beverley Brown
WHILE average house price gains in Scotland were around a modest three per cent in 2016, the equity release sector is booming, arguably evidence of the need for first time buyers relying on the bank of Mum and Dad for a helping hand.
The total value of equity release lending in 2016 was £2.15bn – a rise of 34 per cent on 2015 and double the rate of growth from 2014 to 2015 – making it a landmark year for the sector, says the Equity Release Council, whose members account for around 95 per cent of equity release lending in the UK.
Drawdown products remain the most popular and account for 65 per cent of the market, however, the appeal of lump sum products saw them record their largest share by volume of new plans agreed (35 per cent) since 2010, which the Council says is likely influenced by the use of equity to repay mortgage debt as well as meeting other financial needs.
"Surpassing the £2bn mark for the first time indicates that housing wealth is becoming an increasingly important focus of retirement planning," says Council chairman, Nigel Waterson.