UK Equity Release Market Monitor Q1 2017 Embargoed until 00:01 Wednesday 10th May 2017 Key Retirement, Baines House, 4 Midgery Court, Fulwood, Preston PR2 9ZH All images contained within this report can be provided upon request. Email press.office@keyretirement.co.uk
02 03 04 05 06 08 Contents INTRODUCTION Dean Mirfin, Key Retirement EQUITY RELEASE MARKET MONITOR Quarter 1 2017 Results EQUITY RELEASE MARKET HIGHLIGHTS Popular Uses Quarter 1 2017 Focus Gifting EQUITY RELEASE MARKET HIGHLIGHTS Regional Summary Focus South East REVIEW Number of Plans Value of Plans ANALYSIS Customers by Age Customers by Status Product Mix Key Retirement s Market Monitor provides a quarterly, half yearly and annual review of the UK s equity release market. The Monitor provides journalists, and other industry stakeholders, with detailed data on the market alongside historical comparisons. Key is the leading over 55 s specialist adviser and the UK s number 1 equity release specialist; arranging over 35% of all Equity Release Council (ERC)[1] lending in the UK. The Monitor uses Key s data to reflect the market as a whole and provides the most detailed analysis of the equity release sector, including: usage trends age analysis regional analysis based on - - plan numbers - plan values - property prices The Monitor focuses on a particular region and also a specific usage driver for releasing equity in each edition. Quarter 1 2017 focus Gifting Regional focus South East For further details contact: Dean Mirfin Technical Director KR Group Email dean.mirfin@krgroup.co.uk Telephone 07879 678737 Press office [1] Equity Release Council (ERC) is the equity release trade organisation representing the Equity Release Sector 2
Q1 2017 Results 8,604 58% 633.3m 53% New plan numbers Total amount released The Quarter 1 report reveals the highest recorded year on year increase both for new plan numbers and total lending. This result outweighing all expectations following the strong growth in Quarter 4 of 2016. Sales of plans were 8,604 from 5,447 for Quarter 1 2016, an increase of 58%, whilst lending increased to 633.3 million, from 414.6 million in 2016, an increase of 53%. The average loan amount actual decreased over the period from 76,115 to 73,610. The average property value for those releasing equity increased by 12% year on year however the combination of a higher average and lower level of average release means that the average loan to value is 23% from 26% for the same period of 2016. 58% 62% Drawdown accounts for 58% of all plans 62% are maintaining their homes Drawdown remains the most popular type of plan accounting for 58% of all new plans (Drawdown and Enhanced Drawdown). Drawdown provides potential further borrowing of 232 million in addition to the 633.3 million in initial advances; giving a total market for the quarter of 865.2 million, compared to the total of 540.5 million for 2016 (a 60% increase). Lump sum releases have continued to increase, accounting for 42% of new business compared to 38% for 2016. The average age for those releasing equity was 72, remaining unchanged from the same period of 2016. Biggest movers by region Number of Plans East Midlands South East West Midlands 89% 78% 62% Regional Highlights All 12 regions across the country experienced growth in the total number of plans and growth in total lending. The greatest percentage increase in plan numbers was experienced across South East and the East Midlands, achieving growth of 88% and 75% respectively. The East Midlands also experienced the greatest increase for overall lending, achieving growth of 89% followed by the South East with growth of 78%. Top region for overall lending was the South East ( 204.4m), with London ( 110.2m) taking second place. Lending South East 88% East Midlands 75% South West 60% 3
62% Home and/ or garden improvements 32% Go on holiday 30% Pay debts (e.g. loans, credit cards) Treat or help family or friends Clear outstanding mortgage 13% Help with regular bills Highlights 62% released equity for home and/or garden improvements released equity to gift to family or friends Q1 2017 Focus Gifting In time for the publication of the Quarter 1 review we have also issued additional detail to delve into thoughts and opinions around the motivation for parents and grandparents to gift. The detailed analysis can be found at www.keyretirement.co.uk/ press-release/ The analysis of over 2,000 UK adults looked at levels of gifting both now and anticipated and also looked to gain an insight into gifting patterns. The findings reveal that over 53% want to give a financial gift with an average value of 15,000, specifically as an early inheritance rather than making them wait. The gifts also becomes more substantial, for some looking to gift with 11% expecting to gift in excess of 25,000. Whilst 54% have the means to fund the gift from their existing savings, the research revealed that more than a fifth () of over 55 s specifically stating that they would look to release equity from their homes to fund a gift. Ranking high up the list of reasons to gift is support for a house purchase. Over 58% of all polled wanted to help children or grandchildren to get a foot on the property ladder. Of even more relevance is the fact that 34% have, or are, already helping for this very purpose. 4
Regional Summary Area Value Percentage Change 2016 on 2015 Number of Plans Percentage Change 2016 on 2015 Average Value Released Average LTV % Average Customer Age Average Property Value YOY Var East Anglia 38.1m 52% 592 57% 64,434 26 71 248,127-4% East Midlands 40.m 89% 681 75% 58,687 25 71 236,882-29% London 110.2m 26% 941 43% 117,089 20 72 596,610 121% North 11.1m 34% 207 41% 53,645 24 72 219,913-29% North West 38.9m 31% 691 33% 56,221 25 72 227,508-17% Northern Ireland 3.5m 54% 61 34% 58,409 26 72 221,647-24% Scotland 21.6m 1% 510 40% 42,379 23 71 184,455-48% South East 204.4m 78% 2,431 88% 84,102 22 72 386,446 41% South West 80.4m 61% 1,044 60% 76,945 24 71 318,124 4% Wales 19.9m 54% 371 48% 53,704 26 70 209,096-27% West Midlands 34.9m 62% 517 36% 67,593 29 72 232,655-25% Yorkshire & Humberside 30.4m 49% 560 49% 54,252 24 71 222,268-15% Total 633.3m 53% 8,604 58% 73,610 23 72 322,406 12% Regional Focus South East Total lending 204.4m Plans arranged 2,431 Average released 84,102 Average property value 386,446 Average loan to value Quarter 1 2017 regional focus South East The average value released in the South East was 84,102, the second highest in the UK. The region s appetite for equity release has grown dramatically year on year following a small decline between 2012 and 2013. Plan numbers and lending for previous 5 years have been: Period Plan Numbers Change YOY Lending Change YOY 2013 939-14% 63.1m +9% 2014 1,075 +15% 83.7m +33% 2015 1,211 +13% 97.0m +16% 2016 1,291 +7% 114.6m +18% 2017 2,431 +88% 204.4m +78% The average age of those releasing equity has stayed in line with the market trend at 72 for the year, having gradually increased from 69 over the same period. 5
Number of equity release plans Q1 2017 Area Q1 2016 NUMBER OF PLANS FY Q1 2016 % change 1 South East 2,431 1,291 88.3% 2 South West 1,044 654 59.7% 3 London 941 657 43.1% 4 North West 691 518 33.4% 5 East Midlands 681 390 74.7% 6 East Anglia 592 376 57.5% 7 Yorkshire & Humberside 560 376 48.9% 8 West Midlands 517 379 36.3% 9 Scotland 510 365 39.5% 10 Wales 371 250 48% 11 North 207 146 41.5% 12 Northern Ireland 61 45 34% TOTAL 8,604 5,447 57.9% Review Highest South East (2,431) 9 Lowest Northern Ireland (61) 11 12 7 4 5 8 6 10 3 2 1 6
Value of equity release plans Q1 2017 Area Q1 2016 VALUE OF PLANS FY Q12016 % change 1 South East 204.4m 114.6m 78.4% 2 London 110.2m 87.5m 25.9% 3 South West 80.4m 49.9m 61% 4 East Midlands 40.0m 21.2m 88.9% 5 North West 38.9m 29.8m 30.6% 6 East Anglia 38.1m 25.1m 51.7% 7 West Midlands 34.9m 21.5m 62.5% 8 Yorkshire & Humberside 30.4m 20.4m 49.1% 9 Scotland 21.6m 21.3m 1.4% 10 Wales 19.9m 12.9m 54.5% 11 North 11.1m 8.3m 34.4% 12 Northern Ireland 3.5m 2.3m 54.5% TOTAL 633.3m 414.6m 52.7% Review Highest South East ( 204.4m) 9 Lowest Northern Ireland ( 3.5m) 11 12 8 5 7 4 6 10 2 3 1 7
Analysis Customers by age Average age 72 32% 68% of those releasing equity are couples up from 65% in 2016 21% of single women release equity, nearly double that of single men 3% 13% 17% 9% 3% 55-59 60-64 65-69 70-74 75-79 80-84 85+ Customers by status 68% 21% 11% Couple Single Female Single Male Product mix 43% 15% 19% 0% Reversion Enhanced Drawdown Enhanced Lifetime Mortgage Lifetime Mortgage Drawdown 8