Responsible Life, a later life lending specialist, is reporting a 52% annual surge in lifetime mortgage sales, as retirees increasingly look to equity release in their financial planning.
The broker advised on £41 million of lifetime mortgages in August – up 51.9% from £27 million a year ago.
When drawdown facilities are included, the amount of lifetime mortgage business advised on by the company has increased from £38 million in August 2019 to £50 million last month.
The company believes that the lifetime mortgage market has skipped the traditional summer slowdown thanks to 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 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 (RIOM) mortgages.
In June, Responsible Lending, the lifetime mortgage provider and sister company to Responsible Life, unveiled its fixed rate of 2.45% annual equivalent rate (AER), equivalent to 2.42% management expense ratio (MER).
“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,” says Steve Wilkie, executive chairman of Responsible Life.
“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.”
He concludes: “Equity release rates remain low and rate competition is still fierce. This will continue to draw new customers into the sector.”