A two-speed equity release market emerged in Q2 2019 as sales of new drawdown mortgages grew while take-up of new lump sum mortgages mirrored Q1 2018 volumes. That’s the summary drawn from the latest quarterly market figures from the Equity Release Council. The UK sector trade body, reveals 7,227 new drawdown lifetime mortgages were taken out in Q2 by older homeowners seeking to release cash from their properties. This total was up 5% from Q1 2019 and 2% from Q2 2018. More than two thirds (67%) of new plans taken out between April and June were drawdown, the highest share seen since Q4 2017.
In comparison, 3,502 new lump sum lifetime mortgages were taken out, higher than any quarter prior to Q2 2018 despite being the lowest quarterly total seen over the last year. The industry data highlights the average size of new drawdown plans was consistent with the previous quarter in terms of customers’ first withdrawal (£63,166 versus £62,416 in Q1), although customers reserved more modest amounts of housing wealth for future use (£35,903 compared to £37,069 in Q1). The average size of a new lump sum plan taken out in Q2 was also scaled back slightly to £93,712 (-4% on Q1).
Total clients served rose by 2% over the quarter to 20,866 and were up 3% year on year. Although the number of new customers was down 1% on Q1 to 10,731, the number of returning drawdown customers increased 7% to 9,154 over the same period, driven by more existing customers having these products. Total lending between April and June fell slightly compared to Q2 2018 (- 3%) to £911.3m with the year on year comparison decreasing by 6%. Following the busiest Q1 of any year to date, this meant overall market activity in the first half of 2019 was broadly in line with H1 2018. A total of £1.85bn of housing wealth was unlocked in H1 2019 (versus £1.84bn a year earlier) with 21,585 new plans agreed (versus 21,490 in H1 2018) and a total of 41,263 customers were served (compared to 38,912 in H1 last year).