The Equity Release Council (ERC) recently reported a 7-year low in lifetime loan figures. This is a significant development, as lifetime loans are a popular form of equity release for older homeowners. Equity release allows homeowners to access the equity in their property without having to sell it.
Lifetime loans are a type of equity release product that allow homeowners to borrow a lump sum or regular payments from their home’s value. The loan is then repaid when the homeowner dies or moves into long-term care. The ERC reported that in the first half of 2019, there were just over 10,000 lifetime loan plans taken out, a 7-year low.
The reasons for the decline in lifetime loan figures are unclear, but some experts suggest that it could be due to a combination of factors. One possible explanation is that homeowners are increasingly opting for other types of equity release products, such as drawdown plans. These plans allow homeowners to access their equity in smaller amounts over time, rather than taking out a lump sum.
Another possible explanation is that homeowners are increasingly choosing to downsize their homes instead of taking out an equity release plan. This could be due to the fact that downsizing can provide homeowners with more money than an equity release plan, as they can use the proceeds from the sale of their home to purchase a smaller property.
It is also possible that the decline in lifetime loan figures is due to a lack of awareness about equity release products. Many homeowners may not be aware of the different types of equity release products available and how they work. As such, they may not be taking advantage of the benefits that these products can offer.
Overall, the ERC’s report on lifetime loan figures is an important development and one that should be monitored closely. It is important for homeowners to be aware of the different types of equity release products available and how they work so that they can make an informed decision about which product is best for them.