£1.4bn of real estate equity already freed up this year

Market analysis has revealed that UK owners have already freed up equity to the tune of £1.4bn so far in 2022, with that figure estimated at almost £5.6bn from here the end of the year.

Figures show that in the first three months of this year, more than 12,500 homeowners chose to use the pent-up value built up in their property via end-of-life mortgages – a 21.4% annual increase on in the first quarter of 2021.

Leading Mortgage Broker, Henri Dannellestimates that this figure could reach more than 50,000 by the end of the year, an increase of 19.6% on the 41,990 housing units to release equity in 2021.

With the total value of equity freed up in 2021 exceeding £4.4bn and already reaching £1.4bn in 2022, Henry Dannell estimates nearly £5.6bn could be freed up in real estate equity homes by the end of this year.

This increased market activity is driven in part by high net worth individuals and those at the top of the real estate ladder.

In fact, three of the country’s most expensive real estate areas rank highest for mortgage activity and value released later in life.

The South East (9%) and South West (6%) account for the largest proportion of total end-of-life mortgage plans so far this year and, together with London, also represent the highest value equity released in 2022 – totaling £810.5m in these three regions alone.

This upscale market trend is also apparent when looking at the average value of properties using end-of-life mortgages.

So far in 2022, the average capital-released house price stands at £373,493. This is already 2% higher compared to the first quarter of last year and 14% higher than the average property value paid up on equity observed in the first quarter of 2020.

Additionally, the current value of a property using the release of equity through end-of-life mortgages is 34% higher than the wider UK market average.

Henry Dannell manager Geoff Garrett commented:

“End-of-life mortgages have continued to grow in popularity among homeowners across the country, many of whom are now taking full advantage of the dramatic increase in their property values ​​over the past two years.

For some it has become a safety net to weather the rising cost of living, but we are also seeing this increased activity being driven by those at the top of the market who may not be facing the same financial difficulties as the average homeowner. .

This is due to a number of factors – greater product choice and greater flexibility means end-of-life mortgages are no longer the rigid and complex instrument they used to be and a competitive loan market has also helped reduce the cost of removing equity from a property.

For the vast majority, it’s a tax-efficient way to redistribute their wealth to future generations, allowing children or grandchildren to climb the first foot on the ladder, or perhaps move up a rung or two. upper.

Not only does this form of estate planning help minimize their potential inheritance tax bill, but it also allows them and their families to benefit from this redistribution of wealth here and now, rather than waiting for they died.

Along the same lines, the equity freed up from end-of-life mortgages can also enhance their golden years by supplementing their income or retirement, providing them with the disposable income to enjoy their life choices.

The table shows the number and value of UK equity release plans during the first quarter of 2022 and the annual change compared to the first quarter of 2021
Period Number of packages Annual increase Plan value Annual increase
United Kingdom Q1 2022 12551 21.4% £1,399,519,804 30.5%
UK Q1 2021 10341 £1,072,427,497
The table shows the total number and value of equity release plans by UK region in the first quarter of 2022
Location Number of plans – Q1 2022 Total plan value – Q1 2022
South East 2,872 £391,448,548
London 1,006 £234,476,314
South West 1,480 £184,579,070
West Midlands region 1,047 £100,076,777
North West 1,211 £96,372,283
East Midlands 1,105 £86,516,963
east of england 754 £76,771,544
Yorkshire and the Humber 1,000 £71,635,814
Scotland 819 £64,314,264
Wales 713 £59,722,694
Northeast 439 £26,138,834
North Ireland 105 £7,466,699
United Kingdom – total 12,551 £1,399,519,804
The table shows the total estimated annual number and value of stock release plans for 2022 and the annual change from 2021
Location Number of packages – 2021 Estimated number of plans – 2022 Annual variation (%) Total plan value – 2021 Estimated Total Plan Value2022 Annual change (%)
East Midlands 3,652 4,420 21.0% £281,845,210 £346,067,852 22.8%
east of england 2,481 3,016 21.6% £216,072,444 £307,086,176 42.1%
London 4,243 4,024 -5.2% £942,199,702 £937,905,256 -0.5%
Northeast 1,443 1,756 21.7% £94,949,250 £104,555,336 10.1%
North West 4,227 4,844 14.6% £315,736,632 £385,489,132 22.1%
North Ireland 9,652 420 -95.6% £1,228,678,237 £29,866,796 -97.6%
Scotland 4,919 3,276 -33.4% £516,298,759 £257,257,056 -50.2%
South East 3,493 11,488 228.9% £277,468,833 £1,565,794,192 464.3%
South West 3,003 5,920 97.1% £193,325,491 £738,316,280 281.9%
Wales 2,231 2,852 27.8% £161,733,607 £238,890,776 47.7%
West Midlands region 2,305 4,188 81.7% £151,979,812 £400,307,108 163.4%
Yorkshire and the Humber 341 4,000 1073.0% £19,993,172 £286,543,256 1333.2%
United Kingdom – total 41,990 50 204 19.6% £4,400,281,149 £5,598,079,216 27.2%
The table shows the average value of a property using the equity release and how it compares to the broader average property price
Location Average Equity Release Property Value – Q1 2022 Broader Average Home Price Difference (£) Difference (£)
London £788,333 £523,666 £264,667 50.5%
Scotland £248,728 £181,415 £67,313 37.1%
Wales £274,720 £206,395 £68,325 33.1%
North West £268,328 £205,121 £63,207 30.8%
North Ireland £214,164 £164,590 £49,574 30.1%
West Midlands region £310,029 £240,528 £69,501 28.9%
South West £401,338 £313,834 £87,504 27.9%
Northeast £193,243 £154,913 £38,330 24.7%
South East £469,076 £384,966 £84,110 21.8%
Yorkshire and the Humber £237,163 £199,607 £37,556 18.8%
East Midlands £267,714 £240,329 £27,385 11.4%
east of england £350,310 £343,900 £6,410 1.9%
UK £373,493 £278,436 £95,057 34.1%

Equity release data from Key Advice
House price data from Gov.uk – UK House Price Index


Penny D. Jackson