Level of equity being released by over 55s from their homes has climbed by 47%, with the average loan to value up 6%

Analysis by mortgage broker, Henry Dannell looked at the latest market data on equity release, the average value of homes opting to release equity and the loan-to-value ratio and found that in 2019 prior to the pandemic, the average over 55 released equity to the tune of £75,631. In 2022, this sum has increased to £111,511, a 47.4% increase.

The average value of a home opting for equity release has also increased, up by 18% since the start of the pandemic to £373,493.

Despite this increase, a higher uplift in the sums being released means that the average equity release loan-to-value is now 29.9% – up by 6% compared to the pre-pandemic market.

London not only accounts for the highest level of equity released at £233,098, but the region has seen the largest pandemic increase, with homeowners releasing 73.4% more equity versus 2019.

The South West (64.1%) and East of England (55.6%) have also seen some of the largest increases in the value of equity being released from the average home of an over-55 homeowner.

London has also seen the largest increase in the average property value of a home opting for equity release, climbing by 35.1% compared to prior to the pandemic, followed by the West Midlands (27%) and the East of England (26.9%).

However, it’s the South West that has seen the largest uplift where the average equity release loan to value is concerned. In 2019, this ratio sat at 22.9% in the region but has since climbed by 8% to 31.1% in 2021.

Northern Ireland is home to the highest current equity release loan-to-value at 33.1% and has also seen the second largest increase during the pandemic at 6.8%.

Geoff Garrett, Director of Henry Dannell said, “The increasing popularity of equity release is a trend that has been materialising for a number of years, as both the ability to do so and the cost have become more accessible to a wider range of homeowners.

“As the old adage goes, you can’t take it with you when you die and the events of the last two and a half years have certainly added some perspective for many in this regard.

“As a result, we’ve seen a sharp uplift in later life mortgage market activity, as the nation’s over-55s look to enjoy their accumulated wealth while they still can, with a large segment also utilising equity release as a more tax-efficient approach to passing on an inheritance to children or grandchildren.”