The total number of mortgage completions by people aged 56+ has dropped by 52% since 2005 to 84,576 last year, the Equity Release Council (ERC) reveals.
ERC says: “At a time of significant product innovation […] the unmet demand will need to be addressed as the market recovers.”
Increasing longevity means that the number of people aged 56+ has grown by 31% since 2005 to almost 21m. However, mortgage approvals have followed a different trajectory with fewer older borrowers taking out products.
In 2005, there was one loan completion for every 91 people aged 56 and over in the UK, but the ratio fell to one completion per 246 people in 2023.
During the post credit-crunch recovery over the last decade, the council’s analysis shows the number of people taking out lifetime mortgages has grown across every UK region except the North East, which itself saw significant growth up until 2022.
Of the 12 regions, eight registered double-digit growth between 2014 and 2023.
Regions that recorded the strongest growth rates included Wales, which saw growth of 44%, East Midlands by 23% and the East of England by 21%.
While lending has been subdued this year, ERC says product availability in the equity release market has rebounded as 2024 has progressed.
The council’s analysis of data from AdviseWise shows there were 212 more product launches than withdrawals between August and October.
Rates have also stabilised, with average APRs for new lifetime mortgage products reaching a year-low of 6.31% in September 2024, an improvement on the 7%-plus averages seen last year.
Despite fluctuating economic conditions, loan-to-value (LTV) ratios for lifetime mortgages at age 70 have edged back towards pre-pandemic levels.
ERC chair David Burrowes says: “While lending volumes may be subdued for now, there is no denying the giant strides which have been made in equity release product design and distribution, advice and public perceptions in the post-regulation era.”
“We know the current recovery will be a gradual process with no overnight return to the £6bn+ market of recent years. At the same time, the potential is there to go far beyond this high watermark in the future, and it’s important we turn this reset period into a positive.
“Property wealth has long been one of the most significant assets available to UK households. Advances in lifetime mortgage product design have made it significantly more attractive to access and are likely to be seen in years to come as a major milestone in bridging the gap between residential homeowner mortgages and the later life market.
“The pause in growth provides a chance to focus on the next steps needed to create the sustainable later life mortgage market of the future which our ageing population sorely needs. In a climate of growing pension challenges, property wealth will play a crucial role in bridging the gap between aspirations and affordability in later life.
“The council is focused on working with industry, regulators, and policymakers to ensure consumers receive the best advice and make informed, confident decisions about their financial futures.”