Increases in equity release lending may be tied to swelling numbers of interest-only mortgages approaching maturity, advisers warn.
According to the Equity Release Council lending hit a record £384.3m in the second quarter, up 18 per cent year-on-year from £325.6m in Q2 2014 and beyond the previous three-month record of £375.4m set in Q3 last year.
Some 5,414 new customers took out equity release plans during the quarter, up 11 per cent compared with the first three months of the year and pushing the total beyond 10,000 for the first half of 2015.
But Dalbeath Financial Planning director Matthew Harris says: “There is a bulge of mortgages reaching the end of their term around now and over the next couple of years, and people are having a nasty shock that they don’t have enough time before retirement to get a repayment mortgage, so their only real option that some of the are left with is an equity release product.”
Radcliffe and Newlands IFA Mel Kenny adds: “There are some people entering older age and taking a look around to see where they can find a bit more income to live on, because often they are living in a goldmine of a house.
“But there are also people on the other end of the scale who have been on interest-only mortgages for a very long time who are being forced to find a bit of money through equity release.”