Later life lending specialist Responsible Life has reported a 52 per cent annual surge in lifetime mortgages sales, as retirees increasingly look to equity release as part of their financial planning.The broker advised on GBP41 million of lifetime mortgages in August — up 51.9 per cent from GBP27 million in August 2019.
When drawdown facilities are included, the amount of lifetime mortgage business advised on by the company has increased from GBP38 million in August last year to GBP50 million last month.
The company believes that the lifetime mortgage market has skipped the traditional summer slowdown thanks to a combination of factors, including a strong rebound in house prices and a desire to move onto more predictable, long-term financial arrangements.
It comes amid the increasing popularity of lifetime mortgage products, which present those borrowers using pension drawdown to fund all or part of their retirement with an easier set of affordability criteria compared to traditional mortgages and Retirement Interest Only Mortgages (RIOMs).
In June, Responsible Life’s sister company, the lifetime mortgage provider Responsible Lending unveiled what remains the UK’s lowest ever fixed rate of 2.45 per cent AER (2.42 per cent MER).
Steve Wilkie, Executive Chairman of Responsible Life, says: “The popularity of lifetime mortgages exploded last month thanks to a combination of low rates, robust property valuations in light of the stamp duty holiday and a desire among customers to secure their long-term financial arrangements following lockdown.
“The sector is certainly riding high and it will be interesting to see to what extent such strong annual growth rates can be sustained into the Christmas period.
“Funding for equity release products is liquid so the market has been able to satisfy this extra demand, while funding sources for other types of product have been more difficult to access, leading to a tightening in criteria. Equity release rates remain low and rate competition is still fierce. This will continue to draw new customers into the sector.”