The Equity Release market could break the £2bn barrier for the first time in 2016 after achieving another strong quarter, Equity Release Council data shows.
In the third quarter of 2016 the value of equity release lending increased by 26% year-on-year to £571.6m.
After achieving strong results in the first and second quarters lending has now reached £1.48bn for the first nine months of the year.
This is just £128m short of 2015’s full year total of £1.61bn and £520m short of £2bn.
To break the £2bn barrier lending needs to maintain its year-on-year increases, as lending stood at just £444.9m in the fourth quarter of 2015.
Dean Mirfin, technical director at Key Retirement, is in no doubt that equity release will exceed £2bn in 2016.
He said: “The market is going from strength to strength and is firmly established as a major part of the retirement planning market.
“As retired homeowners increasingly become aware of the wide range of options available to them to enhance and improve their retirement finances we expect the market to break through the £2bn barrier with ease.
“Increased competition, lower rates and a focus on product innovation has made equity release an attractive option for retired homeowners who continue to be squeezed by both historically low annuity and interest rates.”
Nigel Waterson, chairman of the Equity Release Council, said product innovation has played a huge role in the growing appeal of equity release.
He added: “The range of features available now give people the option to choose inheritance protection, downsizing protection, monthly interest repayments or voluntary capital repayments when they opt for a lifetime mortgage.
“Increased competition and new entrants to the market have helped to lower the costs of equity release dramatically in recent years, making it even more attractive to customers.
“Indeed, average equity release interest rates fell further than any other category of mortgage product during the first half of 2016 with independent research showing customers have never been better served in terms of products and rates.”
From July to September 7,414 new equity release plans were taken out, an increase of 11% from the previous quarter and 23% year-on-year.
Lump sum lifetime mortgages were particularly popular, with their market share rising from 33% % of new plans in Q2 to 37%.
Conversely drawdown lifetime mortgages accounted for 62% of new plans in Q3, their smallest market share since Q4 2010.
