UK Equity Release Market Monitor Half Year 2017 Embargoed until 12:00 Thursday 13th July 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 Half Year 2017 Results EQUITY RELEASE MARKET HIGHLIGHTS Popular Uses Half Year 2017 Focus - Clearing Outstanding Mortgages and Repaying Debts EQUITY RELEASE MARKET HIGHLIGHTS Regional Summary, Half Year Focus South West 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. Half Year 2017Focus Clearing outstanding mortgages and repaying debts Regional Summary, Half Year 2017 Focus South West 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
Half Year 2017 Results 17,656 44% 1.25b 33% 39% 23% Biggest movers by region New plan numbers Number of Plans Northern Ireland South East South West Lending Northern Ireland South West West Midlands Total amount released Lump sum releases account for 39% of all plans 23% are clearing mortgage debt 77% 56% 52% 75% 51% 43% The Half Year 2017 report reveals continued strong growth, both for the number of new plans and for overall lending, compared to the same period of 2016. Sales of plans for the first six months of the year were 17,656 from 12,246 for the same period of 2016, an increase of 44%, whilst lending increased to 1.25 billion for the period, from 934.4 million in the first half of 2016, an increase of 33%. These figures exclude any drawdowns made from existing plans. The average loan decreased slightly year on year at 70,625 compared to 76,301, reflecting slight increases in lower cost expenditure items during the period, as shown in the usage data explored on page 4. Drawdown remains the most popular type of plan accounting for 61% of all new plans (Drawdown and Enhanced Drawdown). This remains unchanged year on year. Drawdown, which retains accessible further funds, provides potential further borrowing of 447.5 million in addition to the 1.25 billion in initial advances; giving a total market for the first six months of 1.69 billion, compared to the total of 1.23 billion for the same period of 2016. Lump sum releases account for 39% of new business and mainly dominate younger ages where mortgage repayment is more prevalent. The average age for those releasing equity remains consistent at 71 year on year. Regional Highlights Every region across the country experienced growth both in the total number of plans and in overall lending. The greatest increase, both for plan numbers and for lending was experienced in Northern Ireland with the region achieving growth of 77% and 75% respectively for numbers and lending. There were other stand out regions as well; the South West achieving growth of 52% for plan numbers and 51% for lending, with the South East remaining stronger for new plan numbers, increasing 56% year on year. Top region for overall lending was the South East ( 394.2m) with London ( 222.2m) taking second place. Lending Contribution by Region 0.7% 2.5% 4.3% 5.9% 6.1% 6.5% 6.8% 7.9% 8% 10.9% 12.1% 28.3% Northern Ireland North Wales Scotland West Midlands Yorkshire & Humberside East Anglia East Midlands North West London South West South East 3
64% Home and/ or garden improvements 32% Go on holiday 30% Pay debts (e.g. loans, credit cards) 23% Clear outstanding mortgage 22% Treat or help family or friends 12% Help with regular bills Highlights 64% released equity for home and/or garden improvements 32% released equity for holidays Half Year 2017 Focus Clear Outstanding Mortgages & Repay Debts In 2017 the equity release market is experiencing a continued influx of interest-only mortgage maturities, and it is these customers we remain most concerned about. Those with shortfalls or no repayment method in place have little or no time left to plan for their interest-only mortgage exit. Despite data showing that few borrowers are being re-possessed, what is clear is that we will see that too many are repaying their mortgages through an un-wanted house sale rather than a wanted home move. The average outstanding mortgage is 85,516. Mortgage repayment has grown as a usage for equity release more than any other, accounting for 17% in 2010, increasing to 23% for the first half of 2017, a trend which is expected to continue. Non-secured debt repayment features as a major reason for releasing equity, with 30% (up from 29%) repaying non-mortgage debt. Total, all debt, analysis: Average Balance Average Monthly Payment Mortgages 85,516 883.72 Credit Cards 11,395 288.98 Loans 14,881 322.52 4
Regional Summary Area Value Percentage Change 2017 on 2016 Number of Plans Percentage Change 2017 on 2016 Average Value Released Average LTV % Average Customer Age Average Property Value YOY Var East Anglia 76.9m 14% 1,276 41% 60,273 24 72 253,009-3% East Midlands 76.7m 42% 1,361 39% 56,341 24 71 236,796 6% London 222.2m 21% 1,950 41% 113,961 20 71 575,848-4% North East 23.3m 22% 481 40% 48,345 26 71 185,514-2% North West 79.3m 34% 1,440 27% 55,047 26 71 209,322 3% Northern Ireland 7.3m 75% 139 77% 52,341 28 73 189,973-3% Scotland 46.6m 20% 1,037 45% 44,923 25 72 177,458-2% South East 394.2m 39% 4,822 56% 81,739 21 72 389,540 2% South West 158.7m 51% 2,195 52% 72,284 24 71 305,183 7% Wales 38.1m 20% 713 29% 53,489 27 71 201,277-12% West Midlands 67.6m 43% 1,183 40% 57,100 25 71 228,717 8% Yorkshire & Humberside 56.3m 39% 1,059 35% 53,153 25 71 211,033 15% Total 1247m 33% 17,656 44% 70,625 22 71 314,612 2% Regional Focus - South West Total lending 158.7m Plans arranged 2,195 Average released 72,284 Average property value 305,183 Half Year 2017 Regional Focus South West The average value released in the South West is 72,284, the third highest behind London and the South East. The region s appetite for equity release has grown dramatically, not just in the first half of this year, but over the past few years. Plan numbers and lending for previous first half years have been: Period Plan Numbers Change Lending Change H1 2015 1,302 +4% 85.1m -3% H1 2016 1,443 +11% 105m +23% H1 2017 2,195 +52% 158.7m +51% The increases both in lending and plan numbers has been one of the most consistent and stronger of all regions across the UK. Since H1 2014 the average loan has also remained relatively level from 71,018 to 72,824. The average age has increased slightly from 69 to 71. 5
Number of equity release plans HY 2017 Area HY 2017 NUMBER OF PLANS FY HY 2016 % change 1 South East 4,822 3,082 56.5% 2 South West 2,195 1,443 52.2% 3 London 1,950 1,380 41.2% 4 North West 1,440 1,134 26.9% 5 East Midlands 1,361 977 39.3% 6 East Anglia 1,276 905 41% 7 West Midlands 1,183 846 39.9% 8 Yorkshire & Humberside 1,059 787 34.5% 9 Scotland 1,037 715 45.1% 10 Wales 713 554 28.6% 11 North East 481 344 39.8% 12 Northern Ireland 139 79 76.6% TOTAL 17,656 12,246 44.2% Review Highest South East (4,822) 9 Lowest Northern Ireland (139) 11 12 8 4 5 7 6 10 3 2 1 6
Value of equity release plans HY 2017 Area HY 2017 VALUE OF PLANS FY HY2016 % change 1 South East 394.2m 283.6m 39% 2 London 222.2m 184.2m 20.6% 3 South West 158.7m 105m 51.1% 4 North West 79.3m 59m 34.4% 5 East Anglia 76.9m 67.2m 14.5% 6 East Midlands 76.7m 53.9m 42.4% 7 West Midlands 67.6m 47.3m 42.9% 8 Yorkshire & Humberside 56.3m 40.5m 39.1% 9 Scotland 46.6m 38.9m 19.7% 10 Wales 38.1m 31.7m 20.3% 11 North East 23.3m 19m 22.3% 12 Northern Ireland 7.3m 4.2m 74.5% TOTAL 1247m 934.4m 33.5% Review Highest South East (394.2m) 9 Lowest Northern Ireland ( 7.3m) 11 12 8 4 6 7 5 10 2 3 1 7
Analysis Average age 71 67% of those releasing equity are couples, from 65% in 2016 22% of those releasing equity are single women, double the number of single men Customers by age 31% 22% 18% 13% 9% 3% 3% 55-59 60-64 65-69 70-74 75-79 80-84 85+ Customers by status 67% 22% 11% Couple Single Female Single Male Product mix 45% 16% 17% 22% 0% Reversion Enhanced Drawdown Enhanced Lifetime Mortgage Lifetime Mortgage Drawdown 8